From April 2026, the way you report your income tax will change.
HM Revenue & Customs (HMRC) is introducing Making Tax Digital (MTD) for Income Tax Self-Assessment (ITSA), and if you are a sole trader, self-employed individual, or landlord earning over £50,000 per year, you will soon receive a letter from HMRC explaining what this means for you.
The MTD changes on the way
Currently, you file your Self-Assessment tax return once a year. Under MTD for Income Tax, from 6 April 2026, you will need to:
- Keep digital records of your income and expenses
- Submit quarterly updates to HMRC using MTD-compatible software
- Complete an end-of-period statement (EOPS) and final declaration annually
These changes are designed to make tax reporting more efficient and reduce errors, but we understand that adapting to a new system can feel overwhelming.
What you need to do now
With the first letters from HMRC arriving from April 2025, now is the time to start preparing. Here is what we recommend:
- Understand if you are affected – If your income from self-employment or property exceeds £50,000, you’ll need to comply with MTD from April 2026. HMRC will be writing to affected taxpayers based on their 2023-24 Self-Assessment returns.
- Choose the right software – MTD requires you to use compatible software to keep records and submit updates. If you are unsure which software is best for you, we can help you find the right solution.
- Decide when to sign up – HMRC has provided two options:
- Option 1 – Early sign-up (2025-26 tax year) – This gives you time to get used to MTD before it becomes mandatory, with access to HMRC’s specialist support team.
- Option 2 – Standard sign-up (2026-27 tax year) – You wait until April 2026 to comply.
- Consider exemptions – Some individuals may qualify for an exemption due to age, disability, or lack of access to digital tools. If you think this may apply to you, we can assist with your application.
How we can help
Our team is ready to guide you through the transition to MTD. We can help you:
- Set up digital record-keeping so you’re compliant from day one
- Choose and integrate the right accounting software
- Provide ongoing support to ensure quarterly reporting is smooth and stress-free
Even though the rules do not take effect until April 2026, early preparation is key.
By acting now, you will avoid last-minute stress and ensure you are fully ready when the changes come into force.
If you have any questions or need support with Making Tax Digital, contact us today.
