Making Tax Digital for income tax (MTD IT) is HMRC’s push to modernise the way self-employed individuals and landlords submit their tax information. It’s designed to cut down on errors by requiring you to keep digital records and send updates to HMRC more regularly. According to HMRC, businesses that use MTD software often find it easier to stay on top of tax deadlines and reduce mistakes.

Under MTD IT, most unincorporated businesses and landlords with total business or property income above certain thresholds will need to:

• maintain digital records of income and expenses
• send quarterly updates to HMRC
• file an end of period statement (EOPS) to finalise profits
• make a final declaration that replaces the annual self assessment return.

Who does it affect?

From April 2026, self-employed individuals and landlords with total business or property income above £50,000 per year will need to follow MTD rules. One year later, from April 2027, the threshold drops to £30,000. The government has indicated that other groups, such as those who earn below £30,000, will likely have to follow suit at a later date.

You’re likely to be within this group if you’re a sole trader, landlord or run a small partnership. Even if your income is below the initial threshold, it’s still worth thinking about how you’ll adapt. It’s often easier to start using digital accounting tools early, so when your income grows, you’ll already be organised for MTD.

Key dates to keep in mind

• 6 April 2024: Start of the 2024/25 tax year (with the usual personal allowance of £12,570, if unchanged, for most UK taxpayers).
• April 2026: MTDIT becomes compulsory for individuals who have total business or property income over £50,000.
• April 2027: MTD IT is extended to individuals with income over £30,000.
• After April 2027: We’re expecting more announcements regarding those who fall below £30,000, but no date is set yet.

These dates may feel far away, but in practice you have just a couple of tax years to adjust. We find that clients who start using digital record-keeping and software early often avoid last-minute rushes.

Practical steps to get ready

1. Set up solid record-keeping

MTD IT relies on accurate digital records. If you’re still using spreadsheets or paper-based systems, start exploring ways to keep your data in one place online. Consider scanning or photographing receipts as you go along. This cuts down on lost documents and helps you see how your finances look at a glance.

Even if your current set-up is working, small improvements can save hours of stress. Get into the habit of recording expenses and income right away, rather than waiting until the end of the month or quarter. That way, you won’t have to spend your weekends sorting receipts.

2. Pick the right software for MTD

You’ll need MTD-compatible software to send quarterly updates and finalise your tax details. HMRC has a list of approved providers on gov.uk and many popular packages (such as Xero, QuickBooks and Sage) are MTD-ready.

Think about the features you need.

• Do you invoice clients?
• Do you pay staff?
• Do you keep track of stock?

Aim for a user-friendly system that works on your preferred devices. It doesn’t need to be fancy, but it must meet HMRC’s requirements for MTD. Ask us for suggestions if you’re not sure what will suit you. We work with several software packages, so we can help you choose one that ticks all the boxes.

3. Be aware of MTD impacts tax deadlines

MTD IT adds more frequent data submissions, but it doesn’t necessarily change the payment dates for tax. For the latest tax year, your final self assessment deadline remains at 31 January. But from 2026 onwards, you’ll submit quarterly updates too. These aren’t full tax returns, but they do give HMRC a picture of your income throughout the year. It means you might get fewer nasty surprises in January, as you’ll have a better handle on your tax position.

We recommend setting reminders for these new submission dates, especially if you’re juggling several business tasks. Staying aware of each quarter’s reporting will help you spread out the workload and spot any issues before the year end.

4. Update your budgeting and forecasting

With quarterly updates, you’ll see your financial data in real time. This helps you forecast cashflow more accurately. It’s worth adjusting your budgeting habits now so you can set aside money for tax throughout the year, rather than scrabbling to find it when your self assessment is due.

Online software can show you your monthly or quarterly performance and give you a heads-up if costs are creeping up. And if you start saving for tax each month, you’ll feel less pressure around the payment deadline.

5. Seek support if needed

We understand that not everyone enjoys dealing with tax changes. That’s why we’re here to help. If you’re unsure about the thresholds, uncertain about how to go digital or worried about missing deadlines, talk to us. We can review your current records, guide you in picking software and even handle submissions on your behalf if you’d prefer. Our goal is to help you feel confident and ready for MTD IT when it arrives.

And if you’re someone who dips in and out of self-employment or renting property, we can walk you through your obligations. We’ll look at your total income streams and keep an eye on how close you are to the thresholds. If you do go over the limit, we’ll make sure you’re set up so there’s no drama when 2026 arrives.

The benefits of planning ahead for MTD

Some people see MTD as just another chore, but there are advantages to preparing sooner rather than later. By switching to digital record-keeping now, you’ll learn how to use the software without a tight deadline looming. You can also see your income and expenses with fewer delays, which helps you make better decisions.

According to HMRC’s statistics, a significant portion of tax errors come from manual record-keeping. By reducing those errors, many small businesses end up saving time and money. And if that frees you up to focus on growing your venture, so much the better.

How we can help with MTD

We’ve guided many clients through similar changes, and our aim is to make the process as easy as possible. Whether you need a quick chat about software or in-depth support, we’ll tailor our service to your needs. We also keep track of the latest updates from HMRC, so if anything changes, we’ll let you know.

Ready to take the next step?

MTD IT might sound like another hoop to jump through, but it can bring real benefits once you’re set up. And you don’t have to go it alone. Talk to us about getting ready for April 2026 and beyond. We’ll walk you through the key stages, so you can avoid a mad dash at the end and keep your focus on what you do best.

If you’d like more details about MTD IT, or you want help choosing the right software, please get in touch. We’ll be happy to have a chat and show you how AssureTax can take the stress out of tax changes.