Making Tax Digital (MTD) for Income Tax:

The UK tax system is changing. For millions of self-employed people and landlords, the way you report your income will never be the same again. So, are you ready?

What is Making Tax Digital (MTD)?

Think about how you currently file your taxes: one return, once a year. From April 2026, that world begins to disappear. Making Tax Digital for Income Tax Self-Assessment (MTD for ITSA) means:

→ Quarterly reporting of your income and expenses

→ Digital record-keeping in HMRC-recognised software

→ A final year-end declaration instead of a traditional Self-Assessment return

In short: no more paper records. No more single annual return.

Who is Affected by MTD?

MTD is being phased in:

→ From April 2026 – individuals with income over £50,000

→ From April 2027 – individuals with income over £30,000

→ From April 2028 – individuals with income over £20,000


If your income is below £20,000, you’re out of scope (for now). Partnerships are also excluded, at least until later phases.

Even if you’re not required to join, you can opt in voluntarily. Many businesses do, because it simplifies admin and provides better financial visibility.

How the New Rules Work in Practice

If you fall within MTD, you must:

→ Keep digital records of all income and expenses

→ Submit quarterly updates through MTD-compatible software

→ File a final declaration at year-end


And no—HMRC won’t provide free software. You’ll need to choose your own solution.

Choosing the Right Software

Your MTD software must be:

→ HMRC-recognised

→ Capable of bank feeds and receipt capture

→ Easy to use, scalable, and affordable

→ The big names are already ready: Sage, FreeAgent, QuickBooks, Xero.

Tip: Start trialling now. Don’t wait until 2026.

Penalties for Non-Compliance

MTD isn’t optional once you’re in scope. HMRC is rolling out a strict enforcement system:

Late submissions → a points-based system (four points = a fine)

Late payments → escalating penalties depending on how late you are

The only grace period? The voluntary testing phase—where penalties don’t apply. That’s your chance to get familiar with the system risk-free.

Who Gets an Exemption?

Some groups are deferred until at least 2029 (e.g. Ministers of Religion, Lloyd’s Underwriters,Married Couples’ Allowance recipients, Blind Persons’ Allowance recipients). Others may apply for exemption if digital adoption isn’t reasonable. But don’t assume you’ll qualify; most people won’t.

How to Prepare for MTD—Now

Don’t wait until the deadline. Use the next 18 months wisely:

→ Select MTD-compatible software

→ Start keeping digital records today

→ Sign up for the scheme (it’s not automatic)

→ Early adoption means fewer headaches later.

How We Can Help

We work directly with leading UK software providers, including Xero, QuickBooks, Sage and FreeAgent, and have secured discounted prices for our clients.

Our MTD package starts from just £20/month (65p/day), which includes:

✓ Access to fully compliant software

✓ Regular reminders to keep you on track

✓ Quarterly submissions to HMRC

✓ Final year-end declaration

But it’s not just about compliance. Digital records give you real-time insights, better cash flow forecasting, and far fewer surprises at year-end.

Final Thought

Making Tax Digital is not just another piece of red tape—it’s an opportunity.

Get ahead now, and you’ll spend less time worrying about taxes and more time growing your business.

Call us or book an appointment today to discuss your options.