What is MTD for Income Tax?

Making Tax Digital for Income Tax is a new way for sole traders and landlords to report their income and expenses to HMRC.  It has been planned for several years by HMRC and its objective is to reduce the overall amount of tax that is unpaid because of incomplete record keeping.

Sole traders and landlords must start to use Making Tax Digital for Income Tax (MTD for IT) from 6 April 2026, with start dates dependent on your total combined annual income from self- employment and property.

Taxpayers who are partners in partnerships and LLPs are excluded.  Other exemptions will apply including the digitally excluded due to age, location, disability, or religion.

What are the requirements of MTD for IT?

HMRC will need to see evidence of accurate and regular bookkeeping:

• Records of your income and expenses relating to your self-employment and rental property (both UK and overseas) will need to be maintained digitally
• Returns are to be sent digitally to HMRC every quarter for each source of income (ie self-employment and rental property)
• Your Tax Return still needs to be submitted by 31 January the following year

Who will it affect?

You will need to use Making Tax Digital for Income Tax if you:

• are registered for Self Assessment
• receive income from self-employment or property or both

When will it take effect?

When you need to start using MTD for IT depends on your qualifying income for a tax year. Qualifying income is your turnover before expenses (as opposed to your profit). If your qualifying income is over:

• £50,000 for the 2024 to 2025 tax year, MTD for IT will apply from 6 April 2026  
• £30,000 for the 2025 to 2026 tax year, MTD for IT will apply from 6 April 2027
• £20,000 for the 2026 to 2027 tax year, MTD for IT will apply from 6 April 2028

Do I still need to complete my annual Self Assessment tax return?

The quarterly submissions effectively demonstrate that your record keeping is up to date, but they are not your final submissions to HMRC.   The quarterly submission information will be used in the preparation of your tax return when any adjustments to your accounts and other variables are taken into account.  Your Self-Assessment Tax Return (also known as Final Declaration) will still need to be submitted by 31 January each year.

Which income sources are included in MTD for IT?

MTD for IT applies to the following sources of income:

• Self-employed income
• UK rental income
• Overseas rental income

The threshold for MTD is calculated by combining the income (not profit) from all of these income sources rather than any one individual source.

What digital records do you need to keep?

You need to create and store digital records of your self-employment and property

income and expenses, such as:

• self-employment income — including sales, takings and fees
• self-employment expenses — including the cost of stock, travel costs, office costs and financial costs
• property income — including rent, premiums for the grant of a lease,
• property expenses — including rent, costs of repairs, maintenance or other service

You will need to maintain a record of the amount and the date when the income was received or expenses incurred.

I have more than one income stream – do I need to keep separate records?

You need to maintain separate records for each business and make separate quarterly submissions for each of them.   For example, if you are an electrician and a driving instructor, you will need to maintain separate records for each business and make separate submissions for each.

Income from various UK properties can be combined into one account, but income from overseas property must be accounted for in a separate account, and both UK and overseas property income reported separately to HMRC.

If you are a landlord with jointly owned property, you will be allowed simpler bookkeeping.

All of your income streams will be combined for your Tax Return along with any non-business income, when any reliefs and allowances will be claimed.

What are the quarterly submission dates for MTD?

You will see in the table below the standard update periods and deadlines which line up with the tax year (6 April to 5 April).   Alternatively, you can choose to work to calendar months which may be simpler if your accounting period ends on 31 March.  You will have one month from the end of the quarterly period to submit your information. If you pay VAT and your VAT quarters are different to these dates, you may choose to amend your VAT quarters, but your MTD submission dates cannot be changed.

How can RPG help with my submissions?

We will be able to provide various levels of support each quarter and at the end of the year:

• We can help with digital bookkeeping and preparation of your quarterly submission for your approval. We will then digitally submit your quarterly submissions and also prepare, review and submit your annual Tax Return.
• If you have prepared your own quarterly report for example on Excel, we will review and digitally submit your quarterly returns; and prepare, review and submit your annual Tax Return.
• We can provide assistance with digital accounting software so that you can manage your own record keeping including software recommendations and training, support with bank feeds & reconciliations. We will be available for any ongoing support and queries.
• If you are happy to maintain and submit your own quarterly submissions using digital accounting software, we will prepare, review and submit your annual Tax Return. involves checking each quarter’s submissions, and claiming all relevant reliefs and deductions including personal allowances and pension contributions.

Next steps  

Do not ignore MTD for IT.  It is important that you are fully prepared for April 2026

1. It is important that you check whether you are in scope for MTD for IT.
2. If you are in scope, you should register with HMRC for MTD for IT or ask RPG to do it for you.
3. You need to decide how to manage your digital record keeping and quarterly submissions.
4. Be fully prepared for digital bookkeeping from 6 April 2026 if it applies to you.
5. Speak to RPG for further advice.

If you have any queries

Please contact us straightaway if you have any queries or would like to discuss it further.  You can call us on 0161 608 0000 or email info@rpg.co.uk