The process by which you submit your income to HMRC is about to change fundamentally, permanently, and sooner than you think.
The Self Assessment deadline will remain the same, but from April 2026 some sole traders and landlords must move to Making Tax Digital for Income Tax. With the new Making Tax Digital scheme coming into play, the familiar rhythm of tax return submissions will disappear. In January, individuals have to collect receipts, submit the return, and breathe a sigh of relief as the return is submitted. That rhythm is coming to a close. Making Tax Digital for Income Tax is not a possibility for the future anymore. It has been legislated and is being rolled out in phases. If you earn above the qualifying threshold, your obligations are changing whether you’re ready for it or not.
What Exactly Is MTD for Income Tax, and Why Should You Care?
For those who are unfamiliar with the term MTD, it refers to Making Tax Digital. MTD for Income Tax is a change in how specific individuals submit tax reports to the HMRC. The UK government has introduced this for the self-employed and landlords earning above £50,000. The threshold is based on qualifying income from self-employment and property. Paper tax reports will be replaced by a digital system where records are kept electronically and updates are submitted every quarter. HMRC wants to update old tax setups and close the gap between what should be collected and what is collected.
The process has clear differences. Up to now, you may have submitted yearly tax reports. But from April, instead of relying only on a year-end return, you will keep digital records all year and send four updates every three months to HMRC using special software. However, MTD isn’t that different from the regular way when it comes to reporting. You will send the final statement with your total numbers at the end of the financial year.
We know the one question most of you may have now. That is why this deserves your attention as soon as possible, whether you are self-employed or a landlord.
The Timeline You Cannot Afford to Ignore
- 6 April 2026 – if you earn over £50,000
- 6 April 2027 – if you earn over £30,000
- 6 April 2028 – if you earn over £20,000
This system is strict and expects you to keep up. Not just failing to keep up, being late to register or adopt, can create compliance risks if you do not prepare properly. HMRC has said it will not apply penalty points for late quarterly updates in the first year for those mandated from 6 April 2026, but penalties can still apply for late tax returns and late payment. Many individuals make the mistake of waiting until the last minute to register.
Some even think HMRC will sign you up automatically, but this isn’t true. You or your agent will need to sign up once you know you qualify. Would you want to get fined due to late registration? If not, don’t leave sign-up until the last minute. HMRC says approval can take around 3 working days, so it is sensible to sign up well before you need to start. Don’t wait for a reminder, and don’t wait until the deadline.
What the New System Actually Demands of You
HMRC requires you to be compliant with a range of demands. Not following some of them can penalise you, while some can hurt you even beyond. One such requirement is the need for quarterly updates. Your income and expenses must be submitted every 3 months, along with a final year-end declaration as well.
If you think spreadsheets alone will be enough, you are in for huge news. MTD for Income Tax requires you to have the right tool and software compatible with HMRC’s MTD for Income Tax system. Your current software might not work, so check with your provider or look at HMRC’s list of approved options. Consider adopting some popular full-function accounting options that are approved by them, like Xero, QuickBooks Online, and Sage. A spreadsheet on its own may not be enough. You will need compatible software, or a setup that allows your records to be submitted to HMRC in line with MTD requirements.
If you earn from self-employment and property, you must keep separate records for each and send separate updates, but both will be combined in the final report.
Don’t think of these demands as simply compliance. HMRC wants you to adhere to them not just for their benefit. Following these practices helps you keep accurate digital records of your income and expenses. Most landlords and self-employed individuals still operate in outdated methods. Have you ever thought about how much time and effort you can save by adopting these modern systems? Well, MTD for income tax is HMRC’s way of doing this.
Act Before the Obligation Acts on You
HMRC is committed to starting MTD for Income Tax in April 2026. Check your income. Choose your software. Register early. If you have questions about what you need to do, talk to a qualified accountant before the deadline. At KISL accounting, we offer a team of expert, qualified accountants in Bexley for MTD advice and support. Why go through the hassle of learning something from scratch when you can outsource it to a team like us? We handle each and every task with care and precision, preventing any penalties or errors. That’s our guarantee at KISL Accounting.
Making Tax Digital for Income Tax is not just a task to handle! It is a system to learn. How you experience it depends on how well you prepare.
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