What is Making Tax Digital (MTD)?
Making Tax Digital is a government initiative first announced in 2015, designed to modernise the UK tax system and make it more accurate and efficient for UK businesses and taxpayers to handle their tax obligations.
The first major live roll out was for VAT in April 2019.
Following several postponements, it has been confirmed that MTD for Income Tax (MTD for IT) will take effect from 6 April 2026.
Will you be affected by Making Tax Digital for Income Tax?
Individuals who are self-employed or are running an unincorporated property business (UK or abroad) are affected by the new record-keeping and reporting requirements that will be mandated from April 2026.
What is Making Tax Digital for Income Tax?
Once an individual is mandated to comply with the Making Tax Digital for Income Tax (MTD for IT) requirements, they will need to use compatible software to:
- Record and retain details of each individual sale and business expense.
- Submit quarterly summaries of their year-to-date income and expenses to HMRC.
- Make accounting and tax adjustments and claim reliefs or allowances.
- Finalise their end-of-year position and submit a digital tax return.
For those who are mandated to comply with the MTD for IT requirements, a new ‘points-based’ penalty regime will apply.
When does MTD for IT start?
MTD for IT will commence from 6 April 2026 and will initially apply to the self-employed and those who receive income from UK and foreign property.
- Those with income from self-employment and/or property of over £50,000 in the 2024/25 tax year will be mandated to comply with MTD rules from 6 April 2026.
- Those with income from self-employment and/or property of over £30,000 in the 2025/26 tax year will be mandated to comply with MTD rules from 6 April 2027.
- Those with income from self-employment and/or property of over £20,000 in the 2026/27 tax year will be mandated to comply with MTD rules from 6 April 2028.
How can EA help?
We are on hand to assist and guide you through the transition to MTD for income tax. We are Dext Partners, QuickBooks Elite ProAdvisor’s and Xero Gold Partners and have partnered with these software solutions, to ensure you receive the support you need. All three softwares are HMRC approved, ensuring full compliance with current MTD requirements, while also ensuring you remain prepared for any future legislative changes.
Whether you wish to take an active role in implementing the new rules or prefer to delegate your reporting obligations to us, we are prepared to provide the support you require.
If you’d like to learn more about Making Tax Digital, or how our accountancy service can help you, request a callback to speak to an accountant and get a quote today.
Useful links
HMRC’s overview of MTD for IT: https://www.gov.uk/government/publications/extension-of-making-tax-digital-for-income-tax-self-assessment-to-sole-traders-and-landlords/making-tax-digital-for-income-tax-self-assessment-for-sole-traders-and-landlords
MTD for IT compatible software: https://www.gov.uk/guidance/find-software-thats-compatible-with-making-tax-digital-for-income-tax