Making Tax Digital for Income Tax: What You Need to Know

Written By Claire Foster

Making Tax Digital (MTD) for Income Tax is now being introduced by HMRC.

If you're self-employed or a landlord, it's important to understand whether the new rules apply to you and what you need to do before your start date.

The good news is that, with the right software and a little preparation, the transition is usually straightforward.

What is Making Tax Digital?

MTD is HMRC's programme to modernise the UK tax system.

Instead of keeping paper records and completing one annual Self Assessment tax return, affected taxpayers will:

• Keep digital accounting records.

• Use HMRC-compatible software.

• Submit quarterly updates to HMRC.

• Complete a Final Declaration after the end of the tax year.

The aim is to make tax reporting more accurate while giving taxpayers a better view of their finances throughout the year.

Who Needs to Comply?

MTD for Income Tax is being introduced in stages based on your total qualifying income from self-employment and property.

  • From April 2026: Individuals with qualifying income over £50,000.

  • From April 2027: Individuals with qualifying income over £30,000.

  • Expected from April 2028: Individuals with qualifying income over £20,000, subject to legislation.

What is qualifying income?

The MTD income threshold is based on your qualifying gross income from self-employment and property businesses before expenses are deducted. This includes UK property income and may also include overseas property or self-employment income if it forms part of your UK Income Tax reporting. Employment income, dividends and pension income do not count towards the threshold.

If you're unsure whether the rules apply to you, we're happy to help.

When Is My First MTD Submission Due?

If you join Making Tax Digital from 6 April 2026, your first quarterly reporting period covers: 6 April 2026 to 5 July 2026. Your first quarterly update must be submitted to HMRC by 7 August 2026, just over one month after the quarter end.

Other reporting period and submission deadlines are as follows:

  • Quarter 2: Period covered: 6 July to 5 October. Submission deadline: 7 November

  • Quarter 3: Period covered: 6 October to 5 January. Submission deadline: 7 February

  • Quarter 4. Period covered: 6 January to 5 April. Submission deadline: 7 May

After your fourth quarterly update, you'll complete a Final Declaration, which replaces much of the current Self Assessment reporting process. This is normally due by 31 January following the end of the tax year.

Note - these are the standard quarterly periods. Some businesses may instead use calendar quarters (1 April to 30 June etc.) depending on their software and accounting period.

Do I need to pay tax quarterly now?

No, quarterly updates do not mean you'll pay tax every three months.

They simply keep HMRC updated on your income and expenses. Your tax payment dates remain unchanged.

What Should You Do Now?

If you think MTD may apply to you, we recommend taking these simple steps.

1. Check your income

Work out your annual self-employment and rental income to see whether you exceed the relevant threshold.

2. Move to digital records

If you're still relying on paper records or spreadsheets, now is the ideal time to move to digital bookkeeping.

3. Choose compatible software

You'll need HMRC-compatible software to comply with MTD. Choosing the right software now will make the transition much easier.

4. Get everything ready before your deadline. Don't wait until your first quarterly submission is due.

Setting everything up in advance gives you time to become familiar with the software and avoids unnecessary stress.

Do I Need Accounting Software?

Yes. Most taxpayers affected by MTD will need HMRC-compatible accounting software.

While spreadsheets can still be used in certain circumstances, they generally need to be linked to compatible software to meet HMRC's digital requirements.

Cloud accounting software also offers several additional benefits:

• Keep your records organised throughout the year.

• See your income and expenses in real time.

• Reduce paperwork.

• Estimate your tax position earlier.

• Make year-end tax reporting much simpler.

How Craigerne Accountancy Can Help

Making Tax Digital doesn't have to be complicated.

At Craigerne Accountancy, we can help you:

• Confirm whether MTD applies to you.

• Calculate whether you meet the income thresholds.

• Recommend suitable accounting software.

• Set up your digital bookkeeping.

• Prepare and submit your quarterly updates.

• Complete your Final Declaration.

• Provide ongoing support throughout the year.

Whether you're self-employed, a landlord, or both, we'll ensure you stay compliant while keeping the process as straightforward as possible.

Get in touch today to make your transition to Making Tax Digital simple and stress-free.

Claire Foster