MTD for Income Tax is coming – are you ready?
From 6 April 2026, many sole traders and landlords with income over £50,000 will have to keep digital records and send quarterly updates to HMRC instead of a single yearly tax return. If you’re not sure whether this applies to you, or you’re worried about the software and deadlines, I can help you get everything set up in good time so there are no last‑minute panics or penalties.
I work with Xero and other digital tools to make your record‑keeping as simple as possible, and I can either support you to do it yourself or handle the whole process for you. If you’d like a clear yes/no answer on whether MTD for Income Tax affects you, plus a simple plan of what to do next, please send me a message and I will send you some free information or arrange to have a chat if you prefer.
If you need a quick guide, below is a short presentation that I presented recently,
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Update October 2025 - From November 2025, people who have submitted their 2024 to 2025 tax return will start receiving letters from HMRC making them aware of Making Tax Digital (MTD) for Income Tax.
These letters will:
•inform them that – based on the information they have submitted – they will need to use MTD for Income Tax from April 2026
•inform them of what they need to do to get ready
•include a QR code linking them to GOV.UK guidance
If you receive a letter, you or your tax agent will need to sign you up for MTD and you have two choices, 1. sign up now which is voluntary and means you can use the system to file your 2025/26 Self Assessment Tax Return (SATR) or 2. wait until after that return has been filed and then sign up. Once signed up, you will be able to link your accounting software to enable quarterly returns to be filed after April 2026 when the requirements begins.
Making Tax Digital for Income Tax Self-Assessment (MTD - ITSA)
You will need to use Making Tax Digital for Income Tax from 6 April 2026 or 6 April 2027 if all the following apply:
- you are registered for Self Assessment
- you get income from self-employment or property, or both
- you are not exempt
- your total qualifying income is more than £50,000 or £30,000 respectively
- income from employment, dividends, savings, do not count towards qualifying income
What Counts Towards MTD Qualifying Income
Your qualifying income is the combined income that you get in a tax year from self-employment and property income sources. HMRC assesses your gross income or turnover before you deduct expenses and refers to both self-employment and rental income as business income.
All other sources of income reported through Self-Assessment, such as income from employment, dividends or savings, do not count towards your qualifying income.
What Next?
Register for MTD - https://www.gov.uk/guidance/sign-up-your-business-for-making-tax-digital-for-income-tax#full-publication-update-history
Overview - https://www.gov.uk/guidance/check-if-youre-eligible-for-making-tax-digital-for-income-tax
How it works - https://www.gov.uk/guidance/using-making-tax-digital-for-income-tax
Software - https://www.gov.uk/guidance/find-software-thats-compatible-with-making-tax-digital-for-income-tax
Other information
UK Non-Residents - If you are resident or domiciled outside of the UK, only income from UK self-employment and UK property will count towards your qualifying income. You do not need to use Making Tax Digital for Income Tax for your foreign income.
Foreign Income/UK Resident - If you are resident and domiciled in the UK your income from foreign property or foreign self-employment will count towards your qualifying income.
LATEST GUIDANCE - https://makingtaxdigital.campaign.gov.uk
Major Software Provider Updates Sole Traders on Making Tax Digital
This is a well written summary of the forthcoming changes by Xero, which is one of the approved software providers listed by HMRC.
https://www.xero.com/uk/programme/making-tax-digital/making-tax-digital-for-the-self-employed/#
