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Making Tax Digital

You may have heard of Making Tax Digital (MTD) whereby individuals will have to report regularly to HMRC rather than once a year via a tax return. Maybe you are unaware of the changes, so we hope this short article will help you prepare for HMRC’s move to a digital process. You’ll need to be ready by April 2026.

Tell me more…

It’s all called Making Tax Digital or MTD for short and this will mean that you will have at least five interactions with HMRC per year using software to report directly. You will be able to do this yourself or it can be done via your accountant.

MTD for VAT is already in place (since 2019). This article focuses on MTD for eligible individuals.

From April 2026 MTD ITSA (Income Tax & Self Assessment) will affect sole traders and landlords with turnover above £50,000, dropping to £30,000 in April 2027 and then to £20,000 April 2028.

MTD has been running since April 2019 for VAT. MTD for ITSA for self employed taxpayers and landlords is now due to be phased in from 6 April 2026 (delayed from 6 April 2024).

MTD frequently asked questions...

1. What are the timescales?
  • MTD for ITSA effective from 6th April 2026.
  • Self-employed individuals and landlords with turnover greater. than £50,000, will be mandated to join first, from 6th April 2026
  • Those individuals with income greater than £30,000 will join from 6th April 2027.
  • No sign so far, of MTD for Corporation Tax

Unfortunately not, although there are some exclusions, such as turning over less than £50,000 (£30,000 from 2027), being a trustee of a charitable trust, age, disability and location meaning you have no internet connection.

MTD is designed to include anyone carrying out a trade, profession or a vocation. A property business, or any other income chargeable to income tax.

The positive side is that with the right system in place, you could possibly have more relevant information about your business and the process of submitting information to HMRC shouldn’t be a chore.

This will depend on your circumstances and your bookkeeping skills.

Most of us have a smart phone and there are plenty of apps that will take pictures of receipts and keep them stored, it is what you do with the information from that point onwards.

Most business owners prefer their accounts to be kept up to date by their accountant. Therefore, we would suggest you have a MTD conversation with him or her for some advice for a smooth transition.

So before you decide on a particular app or software supplier such as Quickbooks Online, Xero, FreeAgent etc, why not have a chat with your accountant about the best way forwards for your needs.

MCO Accountancy are based in York, North Yorkshire and are Quickbooks, Quickfile and Xero partners. If we can be of any assistance, feel free to get in touch.

(Updated July 2025)