Diploma in Professional Accounting
Diploma for Financial Advisers
HMRC Authorised Tax Agent
If your total income from self-employment and property is under £50,000, you do not need to switch to Making Tax Digital (MTD) in April 2026. You can continue using the normal Self Assessment tax return for now.
However, the rules are changing in phases. If you earn more than £30,000, you will need to join the scheme in April 2027.
What is Happening? (A Simple Guide)
The government is modernising how we pay tax. Instead of filing one big form once a year (the Self Assessment tax return), they want businesses and landlords to keep digital records and send updates to HMRC four times a year.
This new system is called Making Tax Digital (MTD) for Income Tax.
Here is everything you need to know, explained simply.
When does it start for me?
HMRC is rolling this out in steps so everyone doesn’t join at once. Your start date depends on your “qualifying income” (we explain what that is below).
| If your income is… | You must start MTD on… |
| Over £50,000 | 6 April 2026 |
| Over £30,000 | 6 April 2027 |
| Over £20,000 | 6 April 2028 |
| Under £20,000 | You can stay on the current Self Assessment system for now. |
Important: What counts as “Income”?
This is the most common trap people fall into. When HMRC looks at your income to see if you need to join, they are looking at your total turnover (gross income), not your profit.
- It INCLUDES: Money you get from self-employment (sole trader) and money you get from renting out property. If you have both, you must add them together.
- It DOES NOT INCLUDE: Your wages from a regular PAYE job, dividends, or interest from savings.
Example: You earn £25,000 from a part-time job (PAYE) and £15,000 from a side business.
- Does your PAYE job count? No.
- Your “qualifying income” is only £15,000.
- Result: You do not need to do MTD yet because £15,000 is under the threshold.
What will I actually have to do?
When you eventually move to MTD, the “shoebox of receipts” method will no longer work. You will need to:
- Get compatible software: You must use accounting software (like Xero, QuickBooks, or free alternatives) or an app that connects to HMRC.
- Keep digital records: You need to record your sales and expenses in that software regularly.
- Send quarterly updates: Every three months, you push a button in the software to tell HMRC your totals for that period.
- Final Declaration: At the end of the year, you confirm everything is correct and pay your tax (just like you do now).
Why you should consider an MTD-Compliant Accountant
While you can do MTD yourself, many people find the idea of filing four updates a year stressful. This is where having an accountant who is an HMRC Tax Agent becomes very important.
An “agent” is an accountant who has been officially authorised by HMRC to act on your behalf. They have access to a special Agent Services Account that links directly to HMRC’s systems.
Why this helps you:
- They have the right software: You won’t need to buy or learn complex accounting software yourself; your agent will already have professional-grade software that is “MTD Compliant.”
- They handle the deadlines: Instead of worrying about missing one of the four quarterly deadlines (and getting a fine), your agent sends the updates for you.
- They check for errors: Because they see your data every three months rather than just once a year, they can spot mistakes early, preventing nasty surprises when the final tax bill arrives.
Summary Checklist
- [ ] Check your gross income: Look at your turnover from self-employment and property only.
- [ ] Ignore your PAYE salary: It doesn’t count towards the threshold.
- [ ] Relax for now: If that number is under £50,000, you are safe from the April 2026 changes.
- [ ] Plan ahead: If you will need to join soon, consider finding a tax agent now so you are set up before the rush.
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