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Transitioning to Making Tax Digital (MTD) for Income Tax This April

Transitioning to Making Tax Digital (MTD) for Income Tax – This April

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Transitioning to Making Tax Digital (MTD) for Income Tax This April

IMPORTANT: Making Tax Digital (MTD) for Income Tax officially takes effect from the beginning of April 2026. If you are self-employed, a sole trader, or receive income from property, it’s likely that this will affect you. Today’s guide outlines key dates, the changes, who they affect, how complying with MTD will impact your business — and how Taxfile can help new and existing clients transition quickly and easily.

What’s This About?

(Transitioning to MTD for Income Tax)

Today’s guide is about the need for many people in the UK to transition to Making Tax Digital (MTD) for Income Tax, the new and regular way of reporting income digitally to HMRC. For those affected, it replaces the traditional once-a-year tax return with 5 smaller submissions spread out through the year.

Who Does MTD for Income Tax Apply To?

MTD applies to those earning a qualifying income above a certain threshold from self-employment, property, or a combination of the two.

What is the Threshold for Participation?

Those with a qualifying income over £50k will be affected first. However, that £50k threshold for obligatory entry will reduce quite quickly, meaning people with much lower incomes will also soon be affected. Those earning a qualifying annual income as low as £20k will therefore also need to comply with MTD fairly imminently.

When Do People Need to Start Complying?

For those with a qualifying annual income over £50k in the financial year 2024-25, it’s time to get on board with MTD for Income Tax right away — MTD digital record-keeping is required from early April 2026. For them, their first quarter’s digital submission to HMRC is then required no later than 7 August.

Others with lower incomes will soon follow suit, with those receiving qualifying annual incomes over £30k starting in April 2027, and those over £20k in April 2028. It’s anticipated that those in partnerships will also soon need to comply (date TBA).

While this represents a change in how tax information is reported, Taxfile’s goal is to ensure the transition is as easy as possible. We want you to feel free to continue delivering your services to customers as usual, while we handle all the MTD ‘heavy lifting’ for you.

Connect With Us to Get Started

with MTD for Income Tax

Taxfile’s tax agents are currently reaching out to new and existing clients to assist with this transition. Existing clients should expect to hear from their dedicated agent by the 25th of March 2026. If your annual turnover is above £50,000 and you have not heard from your Taxfile agent by that date, or are a new customer looking to begin your MTD journey, please contact us immediately so we can ensure you remain compliant.

020 8761 8000 Book Appointment

(or contact your dedicated tax agent directly if you are an existing client).

What Do You Need to Do?

To keep your records compliant and up to date, we require your financial data in a digital format:

  • Bank Statements: Please provide these as CSV or Excel digital downloads.
  • Cash Transactions: If you handle cash, please provide receipts or a clear digital record.
  • Business Bank Accounts: We strongly recommend using an account purely for business. Having little to no personal transactions therein will make tracking business income and expenditure much easier.

Personal Support & Reassurance from Taxfile

We understand that not everyone is comfortable with new technology. If you do not have a laptop, a home computer, or a banking app that provides downloads, please do not worry. You are more than welcome to sit with us each quarter to go through your records in person.

Ultimately, we will provide HMRC with the necessary transaction list that reflects your taxable earnings and relevant costs. We view this as a simplification; by filing on a real-time basis throughout the year, we all avoid the stress of a single year-end deadline.

Taxfile Fees

Taxfile will not be charging extra fees for this service. We will simply divide our usual annual self-assessment tax return fee into four equal instalments to help manage your cash flow.

Quarterly Deadlines

Please note the following periods and the deadlines by which you must submit your data to HMRC:

Accounting Period*HMRC Submission Deadline
6 Apr – 5 Jul OR 1 Apr – 30 Jun*7 August
6 Jul – 5 Oct OR 1 Jul – 30 Sep*7 November
6 Oct – 5 Jan OR 1 Oct – 31 Dec*7 February
6 Jan – 5 Apr OR 1 Jan – 31 Mar*7 May

* (Your business accounts may be based on dates either from full calendar months e.g. starting from 1 April, or months based on the Financial Year, which starts on 6 April).

We very much look forward to hearing from — and seeing — our customers more regularly. The Taxfile team is here to support you every step of the way.

Get Started

Get in touch to start your transition to MTD for Income Tax today:

020 8761 8000 Book Appointment

(or contact your dedicated tax agent directly if you are an existing client).

 

Making Tax Digital for Income Tax & Self-Assessment (MTD f ITSA): Your Friendly Guide

Making Tax Digital for Income Tax: Your Friendly Guide

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Making Tax Digital for Income Tax & Self-Assessment (MTD IT): Your Friendly Guide

Tax. The very word can sometimes send shivers down your spine! But what if we told you there’s a way to make things a little less… taxing? Enter Making Tax Digital for Income Tax & Self-Assessment (MTD IT)!

Now, before you click away, hear us out. This isn’t about making tax more complicated. It’s actually about bringing your tax admin into the digital age, which in the long run, can save you time and reduce errors. What’s more, if you work through Taxfile, it could also save you money! Think of it as upgrading from paper maps to Google Maps for your finances!

If you work through Taxfile, it could save you money!

So, what exactly is MTD for Income Tax?

Making Tax Digital for Income Tax & Self-Assessment is a government initiative that affects self-employed individuals and landlords/ladies with a total business and property income above a certain threshold. It requires them to keep digital records of income and expenses and send quarterly updates to HMRC using MTD-compatible software*.

Who needs to get on board?

  • For the 2026/27 tax year, the rules apply to those with a total gross income (turnover) from self-employment and/or property exceeding £50,000 per year.
  • For the 2027/28 tax year, it will apply to those with a turnover greater than £30,000 and …
  • For 2028/29 it will affect those with a turnover of £20,000 or more.

If any of these apply to you, then MTD for Income Tax is something you’ll need to familiarise yourself with — but Taxfile can help!

Instead of one big tax return at the end of the year, MTD requires you to send updates every quarter. Think of it as breaking down the task into smaller, more manageable chunks. These updates will provide HMRC with a summary of your income and expenses for that three-month period.

Why the switch to digital?

HMRC believes that going digital will:

  • Reduce errors — let’s face it, manual data entry can be prone to mistakes. Digital records can help minimise these.
  • Make tax management easier — regularly updating your records can give you a clearer picture of your business’s financial health throughout the year, not just at the tax deadline.
  • Potentially reduce stress — knowing you’re keeping on top of things digitally can be a weight off your mind!

*Do You Need to Buy MTD-Compatible Software?

The key to MTD for Income Tax is using compatible software. The software allows users to keep digital records of income and expenses, submit quarterly updates to HMRC, and view tax information in one place. There are various software packages available. While some are free for those with simple needs, others offer more advanced features.  HMRC estimates the additional cost to the taxpayer at £338 as a one-off administrative burden and then an additional £100 each year following. However, Taxfile has a way for you to potentially avoid such additional software costs, explained below.

“Taxfile has a way for you to avoid such software costs”

Taxfile’s Solution — What to Do

At Taxfile, with our in-house software skills for various MTD packages, we believe that the taxpayer needs only to provide us with their business transactions (income & expenditure) in a simple spreadsheet each quarter — we’ll then take on the additional responsibility.  Working through Taxfile, MTD can be that simple!

“Simply supply us your quarterly income & expenditure transactions in a spreadsheet — we’ll do the rest!”

If you would like to speak to us about MTD, have any concerns, or would like some advice, we offer free consultations. We are happy to help whenever we can, so just drop into our office, book an appointment, or give us a call on 020 8761 8000.

020 8761 8000 Book Appointment Contact Us

Taxfile are accountants and tax advisors based in Tulse Hill, London SE21.