28. June 2026

Making Tax Digital for Income Tax - Do you need to comply, and when?

If you're self-employed or you rent out a property, you may have heard the phrase "Making Tax Digital" and decided to bury your head in the sand.

This guide explains what it is, whether it affects you, and what you'd actually need to do.

The short version: it's a change to how and when you tell HMRC about your income. It is not a new tax, and it does not mean you'll pay more.

What is Making Tax Digital?

Making Tax Digital for Income Tax - usually shortened to "MTD" - s a new way of keeping your business records and updating HMRC.

Instead of doing one tax return once a year, those who need to comply will need to:

• keep their records digitally, using simple software or an app, and
• send HMRC a short summary of their income and expenses four times a year.

That's really the heart of it. Digital records, and a quick update every few months instead of one big return in January.

Does it affect me?

This is the question everyone wants answered, so let's get straight to it.

MTD applies to sole traders and landlords - self-employed people and people who earn rental income. It does not apply to limited companies or partnerships.

Whether you're affected, and when, depends on how much you earn. One important point: HMRC looks at your total income before expenses - your turnover, not your profit. So it's the total money coming in, not what's left after your costs.

This is based on the turnover from your last submitted tax return. For example, the April 2026 start date is based on the figures submitted on the 2024/25 tax return.

Here's the timetable:

• Over £50,000 a year - already included (this started in April 2026).
• Over £30,000 a year - included from April 2027.
• Over £20,000 a year - included from April 2028.
• Under £20,000 a year - not included for now.

If you have both self-employment and rental income, or have more than one business, HMRC adds the qualifying income together to work out which band you fall into.

A reassuring word: HMRC will write to you if you're affected. But you don't have to wait for that letter. If you're not sure which band you're in, we can check for you in a few minutes.

What would I actually have to do?

If MTD does apply to you, three things change:

1. Keep your records digitally. Rather than a shoebox of receipts or a paper notebook, you'd record your income and expenses using compatible software or an app. Once it's set up, this usually makes life easier, not harder, and we'll help you pick something that suits the way you work.

2. Send four short updates a year. Every three months you send HMRC a simple summary of your income and expenses, called a Quarterly Update. They are not four full tax returns. You will need to submit through MTD compatible software.

3. Confirm everything once a year. At the end of the year you do one final step to confirm your figures and finalise your tax. This replaces the annual tax return you do now.

And that's it. It feels like a lot when it's brand new, but it settles into a simple routine very quickly.

Will it be complicated?

Honestly? Anything new takes a little getting used to the first time round. But here's the good news:

• It's the same information you already give HMRC, just shared a bit more often, and kept digitally.
• The software does the heavy lifting, and once it's set up it mostly runs in the background.
• You don't have to work any of it out on your own.

Most of the worry around MTD comes from simply not knowing where to start. Once someone shows you the ropes and gets you set up properly, it's far less daunting than people fear — and many actually prefer having their numbers up to date through the year, instead of one big panic each January.

What should I do now?

If you're not sure whether MTD affects you, or when, the easiest first step is simply to ask. A quick, no-pressure chat is enough to tell you whether you're likely to be caught and roughly when, so you can stop wondering and start planning.

From there, if you'd like a hand, getting you set up properly and looking after the quarterly updates for you is exactly the kind of work we take on, so the software, the deadlines and the digital records become our job, not your worry.

We're a small, friendly bookkeeping practice based in Stoke-on-Trent, helping sole traders feel calm and in control of exactly this sort of thing. We operate remotely, so even if you're not local, we can still help.

Small Business, Big Support.

👉 Get in touch for a no-pressure chat, and we'll tell you exactly where you stand.