New for 2026

Making Tax Digital for Income Tax

The biggest change to how sole traders and landlords report income in years. Here's what it means for you — and how we'll handle the quarterly filing so you don't have to.

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In plain English

What is Making Tax Digital?

Making Tax Digital (MTD) for Income Tax is a new way HMRC wants self-employed people and landlords to report their income. Instead of one Self Assessment tax return a year, you'll keep digital records and send HMRC a summary every three months, then confirm everything in a year-end declaration.

It sounds like a lot more admin — and for anyone doing their own books, it is. But you don't have to deal with it alone. We set up the software, keep your records current, and file every quarter for you, so MTD becomes one less thing to think about.

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The headline

From 6 April 2026, sole traders & landlords earning over £50,000 must keep digital records and file quarterly.

The threshold then drops to £30,000 (2027) and £20,000 (2028) — so most self-employed people and landlords will be brought in over the next few years.

Does it apply to you?

When you're brought into MTD

It's phased in by qualifying income — your gross income (before expenses) from self-employment and property combined.

From April 2026 Sole traders & landlords with qualifying income over £50,000

From April 2027 Those with qualifying income over £30,000

From April 2028 Those with qualifying income over £20,000

Have both a sole trade and rental income? You add them together to test against the threshold — so you can be caught even if neither source alone reaches £50,000. Not sure if it applies to you? Ask us.

What actually changes

Three things you'll need to do

Keep digital records

Record your income and expenses digitally using MTD-compatible software — no more shoeboxes or spreadsheets sent in once a year.

Send quarterly updates

Submit a summary of your income and expenses to HMRC every three months — four updates a year instead of one annual return.

File a final declaration

After year-end, confirm your figures and any other income in a final declaration. This replaces the old Self Assessment tax return.

The easy way

We handle Making Tax Digital for you

You didn't start a business to file with HMRC four times a year. With a fixed monthly fee, MTD is simply part of what we do for you:

We set you up on the right MTD-ready software (Xero, QuickBooks or FreeAgent)
We keep your bookkeeping current so the quarterly updates are ready
We submit all four quarterly updates and your final declaration on time
We tell you what you owe and when — no surprises
A named accountant you can actually reach when you have a question

Get a fixed-price quote 01296 252341

Don't leave it late

Getting ready early is far cheaper than scrambling

The businesses that struggle with MTD are the ones that wait until the deadline. Getting your digital records and software sorted now means the quarterly updates become routine — not a panic. If MTD will apply to you in April 2026, the best time to get set up is well before then.

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MTD questions

Making Tax Digital — your questions answered

When does Making Tax Digital for Income Tax start?

It starts on 6 April 2026 for sole traders and landlords with qualifying income over £50,000. The threshold drops to £30,000 from April 2027 and £20,000 from April 2028. VAT-registered businesses are already in MTD for VAT.

Who has to use Making Tax Digital?

Self-employed people (sole traders) and landlords whose qualifying income is above the threshold for that year. "Qualifying income" is your gross income from self-employment and property combined, before expenses. Limited companies are not yet in MTD for Income Tax (they have their own filing), and MTD for partnerships has been deferred.

What counts as qualifying income?

Your total gross income (turnover, before deducting expenses) from self-employment and from property. If you have both a sole trade and rental income, you add them together to test against the threshold — so you can be caught even if each source on its own is below £50,000.

Do I still do a Self Assessment tax return?

The annual Self Assessment return is replaced by quarterly updates plus a year-end final declaration. So you submit more often, but the once-a-year January return as you know it goes away for income covered by MTD.

What software do I need for MTD?

You need HMRC-recognised MTD-compatible software such as Xero, QuickBooks or FreeAgent (spreadsheets only work with separate bridging software). We set you up on the right software, included in your fee, so you do not have to work it out yourself.

Are there penalties for missing MTD deadlines?

Yes — MTD uses a points-based penalty system. You get a point for each missed submission, and once you reach the threshold a £200 penalty applies, with further penalties for continued lateness. Staying on top of the quarterly updates is exactly what we handle for you.

Is anyone exempt from Making Tax Digital?

Some people can apply for an exemption — for example if it is not reasonably practicable for you to use digital tools due to age, disability, location (no internet) or religious grounds. There are also a few excluded income types. We can check whether an exemption applies to you.

Worried about Making Tax Digital? Let's sort it.

Tell us about your business and I'll show you exactly what MTD means for you and what it would cost to have it handled — fixed price, no obligation.

Get a fixed-price quote 01296 252341