Making Tax Digital (MTD) is transforming how businesses and landlords submit their Income Tax (IT) returns.

Requirements of MTD for Income Tax

Under MTD for Income Tax, sole traders and landlords must maintain digital records and use HMRC-recognised software to track, manage, and submit updates to HMRC. Sole traders and landlords with combined gross income (before expenses are deducted) of more than £50,000 will need to follow MTD for IT rules from April 2026. Those earning over £30,000 will comply in April 2027, and those over £20,000 will follow in April 2028.

They will be required to submit quarterly updates of their business income and expenses to HMRC.

A final declaration must also be submitted, which includes other taxable income, such as savings and investment earnings.

Here’s a comparison between these new rules and the current system:

Before April 2026:

• 1 annual submission

• Paper filings by 31st Oct

• Online filings by 31st Jan

• Paper records allowed

After April 2026:

• 4 quarterly submissions per business

• 1 annual final declaration per individual

• Filing via MTD-compliant software (e.g., Excel spreadsheets)

• Digital record-keeping required

General partnerships are currently exempt from MTD for Income Tax, although this is expected to change as the MTD rollout progresses.

What can we do to help?

We’ll ensure that your bookkeeping software is fully HMRC-approved for submitting quarterly updates and annual declarations. We will guide you through a smooth transition from traditional reporting methods to the new MTD process.

Making Tax Digital For Income Tax