Get MTD Ready – What You Need to Know (Latest Update)

Get MTD Ready – What You Need to Know (Latest Update)

Making Tax Digital for Income Tax – What You Need to Know (2025 Update)

HMRC’s Making Tax Digital (MTD) programme is expanding, and from April 2026, sole traders and landlords earning over a certain threshold will need to follow new digital reporting rules.

Here’s what you need to know:

Who will be affected?

From April 2026, MTD for Income Tax Self Assessment (ITSA) will apply to:

Sole traders and landlords with income over £50,000

From April 2027, this will expand to include those with income over £30,000

If your total self-employed and/or property income is below £30,000, you will remain on the current Self Assessment system for now.

What changes under MTD?

Instead of submitting one tax return per year, you'll need to:

  • Keep digital records using HMRC-compliant software (like Xero or QuickBooks)
  • Submit quarterly updates to HMRC of your income and expenses
  • File a final end-of-year declaration

MTD will not apply to employment income, dividends, or pensions — only to self-employment and rental income

 

How to prepare

If you fall within the upcoming MTD thresholds, it’s important to start getting ready:

  • ✅ Make sure you're using MTD-compatible software
  • ✅ Review how you're currently recording your business income and expenses
  • ✅ Speak to us about setting up your digital system and timelines

We’re already working with clients to make this a smooth transition, and we’re here to help every step of the way.

Need help getting started?

If you're unsure whether MTD applies to you, or if you'd like support setting up digital record keeping, feel free to get in touch. We're happy to offer tailored advice based on your circumstances.

There is also a handy checklist below to help you prepare for MTD.

✅ Get MTD Ready – Checklist for Sole Traders & Landlords

Making Tax Digital for Income Tax Self Assessment (MTD ITSA) is coming – here’s how to prepare in advance of the April 2026 rollout.

1. Check if You’ll Be Affected

  • Total income from self-employment and/or property is over £50,000 (from April 2026)

  • Or, income is over £30,000 (from April 2027)

  • You're currently using paper records or spreadsheets only

2. Choose MTD-Compatible Software

  • Use or upgrade to MTD-approved accounting software (e.g. Xero, QuickBooks, FreeAgent)

  • Ensure the software is set up to record separate income and expenses

  • Enable quarterly submission features

We can advise or help you with setup if you're unsure.

3. Organise Your Digital Records

  • Keep all income and expense records digitally

  • Include dates, descriptions, amounts, and business categories

  • Store digital copies of receipts or use software with receipt capture

4. Prepare for Quarterly Reporting

  • Understand your reporting quarters (e.g. Apr–Jun, Jul–Sep, etc.)

  • Set calendar reminders for due dates

  • Allocate time each quarter for bookkeeping or send records to your accountant in good time

5. Speak with Your Accountant

  • Confirm if you're affected by MTD

  • Ask about training, software options, or moving from spreadsheets

  • Ensure you're registered for MTD when the time comes

 Optional: For Landlords with Multiple Properties

  • Track income and expenses per property

  • Use tags or categories in software to keep properties separate

Need Help?

We’re here to guide you through the process and take the stress out of going digital.

📞 Call us on 01278 433014
📧 Email: info@stonegatebookkeeping.co.uk