If you’re a sole trader or landlord with turnover of £50,000 or more, the way you file your tax return is changing from 6 April 2026.
HMRC is bringing in Making Tax Digital (MTD) as part of their plan to modernize the tax system. This isn't just a change in how you send data; it's a change in how you must keep your records.
The Rollout Timeline
- April 2026: Mandatory for those with a total business and/or property income over £50,000.
- April 2027: Mandatory for those with a total business and/or property income over £30,000.
What MTD Means for You
1. Digital Record Keeping
You must keep digital records of all your business transactions. Paper-only records or simple spreadsheets may no longer be enough unless they can "bridge" to HMRC's systems.
2. Quarterly Updates
You’ll need to submit your income and expenses every 3 months. This gives you a more real-time view of your tax position.
3. Final Declaration
At the end of the tax year you’ll still send a final declaration, confirming the full year’s figures - similar to today’s tax return, but fully digital.
How to Prepare Now
Moving to MTD doesn't have to be stressful if you start early. We recommend:
- Review your turnover: Check if you meet the £50k or £30k thresholds based on your current tax returns.
- Choose MTD-compliant software: Start using cloud accounting software (like Xero or QuickBooks) now to get used to digital record keeping.
- Separate business and personal banking: This makes digital record keeping much cleaner and faster.
You will need to have MTD compliant software in order to prepare and submit your quarterly returns.
If you’re unsure how this may affect you, don’t hesitate to contact us. ✉️
Useful sources
Read the official HMRC rules on Making Tax Digital for Income Tax and check the list of compatible software.
GOV.UK MTD for Income Tax guidance HMRC Find software for MTD