Making Tax Digital (MTD)

HMRC is introducing Making Tax Digital (MTD) for Income Tax, which will change how self-employed individuals and landlords report their income. Traditional Self-Assessment tax returns are being phased out and tax reporting will become more frequent and fully digital.

What does this change mean?
Under MTD, annual Self-Assessment tax returns will be replaced by quarterly reporting and a digital end-of-year submission. You will be required to: Under MTD, annual Self-Assessment tax returns

1

Report your income and expenses quarterly to HMRC using compatible digital software

2

Maintain digital records - paper records will no longer be accepted Maintain digital records - paper records will n

3

Submit an ‘End of year final declaration’ - this will replace your traditional tax return

Who will this affect and when will it affect you?
This change will apply to self-employed individuals and landlords with annual income above specific thresholds:

From April 6th 2026: All those who are self-employed or landlords with relevant total income over £50,000
From April 6th 2027: All those who are self-employed or landlords with relevant total income over £30,000.
From April 6th 2028: All those who are self-employed or landlords with relevant total income over £20,000.

What counts as relevant income?

Relevant income is your total gross income from self-employment and/or property rental before expenses. If you receive £50,000 or more in rental income, even if you have a mortgage and expenses of £40,000 you will need to comply.

What if you have other income?

If you receive other income such as PAYE salary, dividends, pensions or investment income this will need to be declared and included in your final submission at the end of the tax year.

If you would like us as your professional advisers to complete the quarterly returns on your behalf we will assist with completing your end of year final declaration and as part of this we will look to ensure it takes into account all income, as well as allowable expenses and deductions

Making Tax Digital (MTD)

1 Report your income and expenses quarterly to HMRC using compatible digital software

2 Maintain digital records - paper records will no longer be accepted Maintain digital records - paper records will n

3 Submit an ‘End of year final declaration’ - this will replace your traditional tax return

1

Report your income and expenses quarterly to HMRC using compatible digital software

2

Maintain digital records - paper records will no longer be accepted Maintain digital records - paper records will n

3

Submit an ‘End of year final declaration’ - this will replace your traditional tax return