If you’re self-employed or a landlord, you’ve probably heard whispers about Making Tax Digital (MTD). It’s not just another HMRC initiative, it’s a major shift in how you’ll report income and manage your taxes. Here’s what’s happening, when it’s happening, and how to prepare.
What is Making Tax Digital?
Making Tax Digital for Income Tax Self-Assessment (MTD ITSA) starts in April 2026. It’s the government’s plan to move taxpayers away from annual paper or online returns toward quarterly digital submissions using HMRC-approved accounting software.
It’s not optional, if your income meets certain thresholds, you’ll have to keep digital records and report quarterly through software such as Xero, or Sage.
Who needs to join MTD (and when)
From April 2026, individuals earning over £50,000 in combined self-employment and property income must comply.
This figure is based on gross income, that means before expenses, and it includes:
- Total self-employment turnover, plus
- Gross rental income from all properties.
If the total exceeds £50,000, your first quarterly digital return (covering April–June 2026) will be due in early August 2026.
MTD will then expand in later years:
| Year | Income Threshold |
| April 2026 | £50,000 |
| April 2027 | £30,000 |
| April 2028 | £20,000 |
So even if you fall below the £50,000 mark now, it’s worth preparing early.
How HMRC decides who’s in
HMRC will use your 2024–25 Self Assessment to decide who enters MTD first.
If your combined income from self-employment and property exceeds £50,000, you’ll receive an official notice confirming your MTD start date.
Landlords with multiple properties should take note: while one rental might not push you past the limit, combined rents could.
Self-employed individuals must look at turnover, not profit, so even if your take-home pay is modest, your gross income might trigger MTD.
Thinking of ditching your Limited Company? Think again.
Some company directors think closing their limited company and trading as a sole trader will simplify things.
But if your self-employment or rental income exceeds the thresholds, you’ll still fall under MTD for Income Tax.
Limited companies have separate digital requirements for VAT, but the Income Tax version of MTD only applies to individuals, not companies.
If you’re a director who also earns from property or freelance work, those personal incomes may still be subject to MTD rules.
Quarterly returns: The new normal
Gone are the days of leaving your tax return until January.
Under MTD for Income Tax, you’ll submit digital summaries every three months, showing your total income and expenses for that period.
Typical schedule:
- April – June: due early August
- July – September: due early November
- October – December: due early February
- January – March: due early May
Each submission must be made through MTD-compatible software, paper returns and HMRC’s old online form won’t be accepted.
Why digital record-keeping matters
MTD requires that all business and property income be recorded digitally, stored securely, and submitted using approved software.
That means no more shoeboxes of receipts. Instead, you’ll use apps to upload and categorise expenses in real time.
This habit not only keeps you compliant but gives you real-time insight into your finances, helping with budgeting, forecasting, and tax planning.
Preparing early: Your best strategy
Although the first digital returns aren’t due until August 2026, getting ready now is smart. Steps to take:
- Choose your software – test options like Xero or FreeAgent.
- Go digital now – start keeping electronic records so you can identify any gaps early.
- Talk to us as your accountant – we can help ensure your software links correctly with HMRC.
- Keep consistent books – quarterly submissions mean you’ll need year-round accuracy.
Opting in early gives you time to learn the process without the pressure of a deadline.
The Bottom Line
Making Tax Digital is one of the biggest changes to self-employed and landlord taxation in decades.
It’s not about extra paperwork, it’s about moving to a more accurate, digital system that keeps HMRC updated throughout the year.
By planning ahead, adopting suitable MTD-compatible software, and working closely with your accountant, you’ll avoid the chaos that’s likely to hit in April 2026.
Get organised now, stay compliant later, and keep that accountant panic firmly at bay.
Please always seek professional advice before taking any action. We are happy to answer questions in future issues. Please send your questions through the contact us page on our website: www.champconsultants.co.uk
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