Making Tax Digital for Income Tax
The biggest change to personal tax since self assessment.
From April 2026 many sole traders and landlords must keep digital records and report to HMRC quarterly. Here is what it means, whether it applies to you, and how we handle it.
- We confirm whether it applies to you
- We set up compatible software
- We file the quarterly updates
What is changing
Making Tax Digital for Income Tax replaces the single annual self assessment return with digital record keeping and four quarterly updates to HMRC, followed by a final declaration after the year end. It is being phased in by income level, starting with the largest.
The phasing
The rollout is staged by qualifying income — that is gross income from self-employment and property combined, before expenses:
- From 6 April 2026 — qualifying income above £50,000
- From April 2027 — qualifying income above £30,000
- From April 2028 — qualifying income above £20,000
Thresholds and timing are set by HMRC and have moved before. We confirm your position against the current rules before you commit to anything.
The detail that catches people out
The test is on gross income, not profit. A landlord with three properties producing £54,000 of rent and £20,000 of costs is inside the first phase, even though the taxable profit is well under the threshold. Self-employment and property income are added together for the test, so someone with a modest trade and a couple of rentals can be caught by the combination when neither would qualify alone.
What we do about it
- Check. We confirm whether you are in scope, and from which date, using your actual figures.
- Prepare. We put compatible software in place, migrate your records and set the year up so the quarterly updates are a by-product rather than a project.
- Run it. We file the four quarterly updates and the final declaration, at a fixed monthly fee.
- Use it. Because the numbers are current, we can tell you what your tax bill is likely to be with months of warning rather than weeks.
The upside nobody mentions
Quarterly reporting is more administration — there is no honest way around that. But it forces the records to stay current, and current records mean a predictable tax bill, faster year ends, cheaper accounts preparation and a real chance to act before the year closes rather than after. For clients who were already keeping decent books, the change has been smaller than they feared.
Quick check
- Self-employed or a landlord?
- Gross income over the threshold?
- Still filing one return a year?
Three yeses means the rules apply. Call and we will confirm in five minutes.
What you will need
- MTD-compatible software
- Digital records kept through the year
- Four quarterly submissions
- A final declaration after year end
We can run all of it
Fixed monthly fee, everything filed for you.
Making Tax Digital: your questions
Does Making Tax Digital apply to me?
MTD for Income Tax applies to sole traders and landlords whose combined qualifying income from self-employment and property exceeds the threshold for the relevant phase. It is based on gross income before expenses, not profit — which catches people out. If you are close to the line, ask us to check.
What counts as qualifying income?
Gross income from self-employment and from property, added together, before deducting any expenses. Employment income, dividends and savings interest are not part of the test, although they still go on your return.
What do I actually have to do differently?
Keep your records digitally in compatible software rather than on paper or in a plain spreadsheet, send a summary update to HMRC each quarter, and then finalise the year with a closing declaration in place of the old single return.
Do I pay tax more often?
No. The quarterly updates are reporting, not payment. Your payment dates are unchanged. The practical benefit is that you see your likely liability building through the year rather than discovering it in January.
What software do I need?
Software recognised by HMRC as MTD-compatible. We will recommend and set up something proportionate to your business rather than sell you the largest package available. See our software setup service.
What happens if I ignore it?
A points-based penalty regime applies to late submissions, with a financial penalty once you accumulate enough points, plus separate late payment penalties. It is designed to catch repeated lateness rather than a single slip, but it accumulates quietly.
Can you just do all of it for me?
Yes. That is what most of our affected clients have chosen. We keep the digital records, file the four quarterly updates and complete the final declaration, at a fixed monthly fee.
Let’s take this off your plate.
A free, informal, no-obligation conversation. Bring your questions — leave with a fixed-fee quote.