Making Tax Digital for Income Tax – Are You Ready?
Making Tax Digital for Income Tax – Are You Ready?
Around 2.9 million sole traders and landlords will soon be affected by Making Tax Digital (MTD) for Income Tax. The government is pressing ahead with the rollout, which represents one of the biggest changes to tax reporting in years.
Here’s what’s changing, when it’s changing, and how you can get prepared.
What is MTD for Income Tax?
Under MTD, sole traders and landlords with income above certain thresholds will need to:
- Keep digital business records.
- Use HMRC-approved software to send quarterly updates.
- Submit an annual final declaration.
Your “qualifying income” is your total gross income from self-employment and property before expenses are deducted.
Who Will Be Affected and When?
MTD is being introduced in stages based on income levels. HMRC has released figures showing how many people are affected, based on the 2023–24 tax year:
| Qualifying Income | When MTD Becomes Mandatory | Number of People Affected |
|---|---|---|
| Over £50,000 | 6 April 2026 | Around 864,000 |
| £30,000 – £50,000 | 6 April 2027 | Around 1,077,000 |
| £20,000 – £30,000 | 6 April 2028 | Around 975,000 |
In total, around 2.9 million individuals will eventually be required to follow the new MTD rules.
Are You Ready?
The move to MTD means a big shift in the way records are kept and tax is reported:
- Quarterly updates – bookkeeping will need to be done regularly; leaving everything until year-end won’t be possible.
- Digital record-keeping only – paper records will no longer meet HMRC requirements.
- Software is essential – you’ll need compatible software to submit updates and stay compliant.
HMRC’s latest figures show that while many already use software, there’s still a significant proportion who don’t:
- Over £50,000 income: 63% already use commercial software
- £30,000–£50,000 income: 49% use software
- £20,000–£30,000 income: 48% use software
What You Need to Do Now
1. Check your qualifying income – add up your total gross self-employment and property income for the year.
2. Review your record-keeping – paper records will no longer be allowed.
3. Consider your software options – cloud accounting tools make quarterly submissions straightforward and help keep you compliant.
Don’t wait until the deadline. Moving to digital record-keeping now gives you time to get comfortable with the software and avoid last-minute stress.
How We Can Help
We can support you in different ways depending on your preference:
- Software advice and training – we’ll help you choose the right tool and show you how to use it confidently.
- Full bookkeeping service – if you’d prefer not to use software yourself, we can handle it for you.
Whatever route you take, we’ll make sure the transition is smooth and stress-free so that when MTD arrives, you’re already ahead of the game.
Get in touch with us today to start preparing.