While many VAT-registered businesses already comply with MTD, the extension to Income Tax Self Assessment will
impact landlords, sole traders, and partnerships. Businesses should begin reviewing systems now.
Making Tax Digital (MTD) for Income Tax will become mandatory for self-employed individuals and landlords, phased in based on income. It starts next week, 6 April 2026, for those with qualifying income over £50,000, 6 April 2027 for those over £30,000, and later for lower thresholds. Users must use compatible software to report income quarterly.
MTD for Income Tax Start Dates
- 6 April 2026: Mandatory for sole traders and landlords with qualifying income over £50,000.
- 6 April 2027: Mandatory for those with qualifying income over £30,000.
- April 2028: The government plans to extend this to those with income over £20,000.
Key MTD Reporting Requirements
- Quarterly Updates: You must submit summaries of income and expenses directly from compatible software. These are due on 7 August, 7 November, 7 February, and 7 May (1 month after the end of each quarter).
- Final Declaration: A “finalised” tax return (End of Period Statement) must be submitted, usually by 31 January following the end of the tax year.
- Threshold Calculation: The threshold is based on the gross income from self-employment and property, not profit, for the tax year.
Who is Exempt?
You may be exempt if you are digitally excluded, the nature of your location makes it impractical, or if you are a trustee, partner in certain partnerships, or a non-resident.
If exempt, you continue using traditional Self Assessment.
You can voluntarily join MTD before these dates to get ahead of the requirements.
MTD requires:
- Digital record keeping
- Compatible accounting software
- Quarterly updates to HMRC
- End-of-period statements
Businesses using spreadsheets may need bridging software or full accounting systems. The transition offers benefits:
- Real-time financial insight
- Reduced errors
- Better cash flow tracking
- Improved compliance
However, implementation requires planning. Businesses should:
- Review bookkeeping processes
- Choose software
- Train staff
- Test systems before deadlines
Accountants play a vital role in supporting clients through the transition. If you are concerned about MTD and your readiness, please contact us today! Early adoption reduces stress and avoids last-minute changes.