Making Tax Digital for Income Tax

MTD for Income Tax will initially apply to:

• Self-employed individuals
• Landlords
• Partnerships
• Anyone with business or property income exceeding £50,000 annually

For those with income between £30,000 and £50,000, the rules will come into effect from April 2027.

Despite HMRC's communications, awareness of MTD for Income Tax remains limited. Many taxpayers who will be required to comply are unaware of the changes that they will need to make from April 2026:

• There will be quarterly digital reporting requirements, the first report is anticipated to be due for the period 6 April to 5 July 2026
• The need for compatible software, many solutions that currently report under MTD VAT should be able to handle the switch to MTD ISTA
• The significant changes to their current tax reporting processes

Software Implementation

Many self-employed individuals and landlords still use paper records or basic spreadsheets. Transitioning to digital record-keeping requires developing new skills and habits. Identifying and implementing compatible accounting software takes time. Starting now allows for:

• Researching appropriate solutions, there are many options out there, some will fit different types of businesses better.
• Training yourself or staff to ensure that you will be able to use and update the data in time for submissions
• If necessary migrating historical data
• Avoiding last-minute compliance costs

Next Steps

1. Determine if you fall within the scope of MTD for Income Tax
2. Research compatible software options
3. Begin digitising your record-keeping processes
4. Consult with an accountant or tax professional for personalised guidance

The 2026 deadline may seem distant, but the scale of the changes required to comply with MTD for Income Tax make early preparation essential. Those who begin adapting now will face a much smoother transition when the requirements become mandatory.

Need help or want to find out more just get in touch.