Making Tax Digital (MTD) for Income Tax

You may have heard of Making Tax Digital (MTD) for Income Tax and be wondering, “How does this impact me or my business?”. Below is a simple breakdown of what it means, who it applies to and the key dates to be aware of.

Who does it impact?

MTD for Income Tax applies to Sole traders and Landlords. If you are a LTD company director or a part of a partnership, you will continue to submit an annual self-assessment tax return by the usual 31^st January deadline.

When does it impact me?

The rollout is based on your qualifying income – this is the combined income for the period before expenses are deducted. This figure is assessed 2 tax years before the tax year in question.

Key Dates:

-          If your qualifying income is above £50,000, then from the 6^th April 2026, you must submit quarterly updates to HMRC. (Deadlines to be submitted are below)

-          If your qualifying income is above £30,000, then from the 6^th April 2027, you must submit quarterly updates to HMRC. (Deadlines to be submitted are below)

-          If your qualifying income is above £20,000, then from the 6^th April 2028, you must submit quarterly updates to HMRC. (Deadlines to be submitted are below)

Example:

If I earned £45,000 in 24/25 tax year via self-employment and rental income in the 24/25 tax year. I would continue to submit my self-assessment tax return on the 31st January deadline for that tax year. From 6th April 2027, I would need to submit quarterly updates to HMRC for the 27/28 tax year.

What do I need to do if it impacts me?

Quarterly updates will need to be submitted via a compatible software. (This will be accounting software such as Sage/Xero/QuickBooks or a Bridging software such as 123Sheets/AbraTax). Accounting software is recommended as this helps keep digital records of all your income and expenses in one place but not required by law. On the other hand, if you don’t feel comfortable buying full accounting software, you can use bridging software which connects your spreadsheets directly to HMRC’s system.

Quarterly updates will include a summary of Income and expenses plus any adjustments that may be required. However, you will also get an opportunity to submit final adjustments before the self-assessment tax return deadline on the 31^st January.

Landlords need to submit one quarterly update which includes income and expenses for all rental properties in one submission. However, business owners need to submit one quarterly update for each business individually.

MTD Quarterly submission Deadlines

Update 1	Update 2	Update 3	Update 4
6th April – 5th July	6th July – 5th October	6th October – 5th January	6th January – 5th April
7th August	7th November	7th February	7th May

I hope this post has made MTD a little clearer! Keep an eye out for our monthly blogs, where we’ll share more practical insights, updates, and tips to make managing your business finances easier.