Making Tax Digital
Making Tax Digital (MTD) and What Does it Mean for the Self-Employed
If you’re a sole trader or landlord with a total income over £50,000, you’ll need to be ready for Making Tax Digital for Income Tax Self Assessment (MTD for ITSA) by 6 April 2026. This is when HMRC’s new digital reporting rules start to roll out.
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Those earning over £30,000 will be brought in from April 2027,
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And those earning over £20,000 from April 2028.
Instead of filing your tax return through the HMRC website, you’ll be required to keep digital records and use HMRC-approved software. You’ll need to send quarterly updates to HMRC and submit a Final Declaration (including all other taxable income) by 31 January each year.
If you’re VAT-registered, you may already be familiar with MTD. Since April 2019, MTD has been mandatory for VAT-registered businesses earning over £85,000, and extended to all VAT-registered businesses from April 2022.
From 1 April 2024, the VAT registration threshold increased to £90,000. If your turnover meets or exceeds this level, you must register for VAT — and HMRC will automatically sign you up for MTD as part of the process.
The Benefits of Making Tax Digital for Income Tax (MTD for IT)
If the thought of switching to digital tax submissions feels a little daunting, don’t worry — MTD for IT comes with real benefits for the self-employed.
Many sole traders and small businesses who adopted cloud accounting software for MTD for VAT have already seen improvements like time savings, greater financial confidence, and better control over their numbers.
Here’s how MTD for IT can help you too:
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Greater Accuracy
Using software reduces the risk of human error. Features like automated data entry ensure your bookkeeping records are updated in real time — and your quarterly submissions are populated directly from your records, with no need for manual typing. -
Smarter Tax Planning
With each quarterly update, you get a clearer picture of your estimated tax bill. This means fewer surprises and better cash flow management — so you can plan ahead with confidence. -
Less Stressful Bookkeeping
Although you’ll report more frequently, each submission is smaller and more manageable. Turning your bookkeeping into a monthly or quarterly habit helps you stay on top of things — avoiding the last-minute scramble in January.
When Does MTD for IT Start for the Self-Employed?
Making Tax Digital for Income Tax Self Assessment (MTD for ITSA) will be introduced in phases based on your income:
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From April 2026 – If your annual income is over £50,000
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From April 2027 – If your income is over £30,000
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From April 2028 – If your income is over £20,000
These rules apply to both sole traders and landlords.
Is There a Deadline for MTD for IT?
Although originally planned for 2024, MTD for IT has been delayed until April 2026. Due to Basis Period Reform, everyone’s digital start date will be aligned to 6 April 2026, regardless of their accounting year-end.
While the rollout is still a little way off, voluntary sign-up is available now. Getting started early can help you get comfortable with the new digital process before it becomes mandatory.
You can check if you’re eligible for early registration on HMRC’s website.
Want to know more about Making Tax Digital?
We’re fully prepared and ready to help you make the switch. Whether you’re an existing client or new to us, we’d be happy to guide you through the process.
