Are you an individual with income over £50,000 a year from self-employment and/or property? If so, significant changes are on the horizon that will affect how you manage and report your tax affairs.
What Is Making Tax Digital for Income Tax?
The government’s Making Tax Digital initiative is transforming how people manage and report finances. From April 2026, MTD for Income Tax will require digital records and quarterly HMRC updates.
If you are an individual with income over £50,000 a year from self-employment and/or property, this update is for you.
Key Requirements
MTD for Income Tax means that self-employed individuals and landlords must:
Keep digital records of income and expenses
Submit quarterly updates to HMRC using approved software
Continue to file an annual declaration replacing Self Assessment
Paper records or manual returns will no longer meet HMRC requirements once MTD becomes mandatory.
Why Is This Change Happening?
HMRC’s shift to Making Tax Digital aims to:
Reduce common filing errors
Improve financial transparency, and help with better tax planning
Simplify compliance for individuals & small firms
Modernise the tax system
When Will It Start?
The rollout will happen gradually, and we are aware HMRC have already begun contacting some of those affected.
April 2026: Self-employment and property income over £50k
April 2027: Those with income over £30,000
April 2028: Those with income over £20,000
Partnerships will join the scheme at a later date, still to be confirmed by HMRC.
It’s important to note that qualifying income is based on total income from these sources, not profits or income from each activity in isolation.
What Will You Need to Do?
Once MTD is in effect, you’ll need to:
Keep all income and expense records digitally using MTD compatible software (such as Xero, QuickBooks, or FreeAgent)
Submit quarterly reports to HMRC within one month and seven days of each period ending
File a final declaration annually to confirm your total income, which will replace the existing self-assessment tax return
This means moving from one annual submission to five submissions per year.
