Making Tax Digital (MTD) for income tax will be mandated for a large group of self assessment taxpayers from 6 April 2026, with even more individuals being mandated in 2027 and 2028.
If your combined turnover from a sole trade or property business was over £50,000 in the 2024/25 tax year, you will likely be required to comply with the MTD for income tax rules from 6 April 2026.
Using approved software
MTD requires the use of software. Whether you are already a ‘digital native’ with your bookkeeping or have not yet made the jump, it will be vital to make sure that any accounting software you use is HM Revenue & Customs (HMRC) approved for MTD use.
Using software for keeping your accounting records can have benefits beyond helping you comply with MTD. For instance, software can help streamline some of your work, make it easier to forecast your cash flow, help inform you in making financial decisions and reduce mistakes.
That means that when you are selecting accounting software, it is worth considering some of the other advantages it could give you and your business.
Registering for MTD
Based on your tax return information, HMRC will get in touch with you if you need to get ready for Making Tax Digital.
However, HMRC will not sign you up automatically. It is important to do this in time.
Are there any exemptions?
There are some automatic exemptions from MTD. For instance, if you are submitting a tax return as a trustee or as a personal representative of a taxpayer who has died, there is no need to sign up for MTD. Generally, HMRC will tell you if you are automatically exempt.
In addition to automatic exemptions, there are situations where an exemption can be applied for. So, it pays to check whether your situation might mean you can apply.
What if your income is less than £50,000?
MTD is being given a phased introduction. MTD will become mandatory for sole traders and landlords as follows:
- 6 April 2026 – those with income above £50,000.
- 6 April 2027 – those with income above £30,000.
- 6 April 2028 – those with income above £20,000.
It is possible to voluntarily sign up sooner if you wish.
Does MTD apply to partnerships?
Not yet, however, HMRC have advised that business partnerships will also need to use MTD in the future. The timeline for when this will happen will be set out at a later date.
Would you like help with MTD?
Choosing software can be a bit of a minefield, so if you would like support, we can offer you a tailored recommendation and any training you need. We can also handle your registration with HMRC.
If you would like ongoing help with bookkeeping, filling in the quarterly returns, or you just want us to handle the end-of-year return, please get in touch. We would be happy to help you!
