It’s coming: Are you ready for Making Tax Digital for Income Tax (MTDfIT)?

From 6 April 2026, Making Tax Digital for Income Tax (MTD fIT) applies to individuals – sole traders and landlords – whose qualifying gross income from self-employment and/or property exceeds £50,000 in the 2024‑25 tax year. You must now keep digital records, use HMRC‑recognised software, and submit quarterly updates, with a final declaration at year end. Thresholds then fall to £30,000 in April 2027 and £20,000 in April 2028. A major change is underway, and preparation is essential.

What is MTDfIT and who needs to act?

MTDfIT replaces the annual Self-Assessment tax return with four quarterly income and expense updates plus a final declaration, all submitted digitally via compatible software.

Who is affected from April 2026?

• Individuals registered for Self-Assessment who earn self‑employed or property income over £50,000 gross in 2024‑25.
• If your return shows income above that level, you must sign up – even if your income drops later.
• Exemptions apply only in very limited circumstances (for example, on disability or religious grounds) 

Key dates and deadlines

Penalties and why time matters

Under Making Tax Digital (MTD), you must file your returns using compatible software and keep digital records. Failing to meet any of these requirements may result in penalties under a points-based system.

You’ll receive penalty points for late submissions. Once you reach a set number of points, you could be charged a penalty.

How to prepare now

1. Check your qualifying income: Review your 2024‑25 Self-Assessment return. If combined self‑employment and property income exceeds £50,000, you're in scope.
2. Review and digitise your records: Start keeping digital records of all business/property transactions now – even if voluntary sign-up is possible in the beta phase.
3. Choose software early: Make sure it’s on HMRC’s recognised list and supports digital linking. Options include full accounting packages, API-enabled spreadsheets, or bridging tools.
4. Sign-up for the public testing phase: HMRC encourages early sign‑ups so taxpayers can become familiar with MTDfIT well before April 2026, with no penalties during testing.

Why start now?

My colleague Chris Bale has written about the benefits of MTDfIT. Be sure to check out his blog here.

What are the benefits of Making Tax Digital? | Blog | Larking Gowen

Need help?

We’re experts in supporting businesses through MTD changes. We can help you check eligibility, assess software options, sign up early, and get comfortable with quarterly updates.

Get in touch with your usual Larking Gowen contact or email enquiry@larking-gowen.co.uk to start preparing confidently for April 2026.

Martin Bugg