Is Making Tax Digital the same as self-assessment?

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Making Tax Digital (MTD) is not the same as Self-Assessment. Instead, Making Tax Digital is the new, upgraded system that is replacing the traditional annual Self-Assessment tax return for many UK sole traders and landlords.

While the actual tax rules and how much you owe remain exactly the same, MTD completely changes how and when you report your income and expenses to HMRC.

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The Old Way vs. The New Way

If you have been self-employed for a while, you are probably used to the yearly scramble to find your receipts. Here is a simple breakdown of how the two systems compare:

Traditional Self-Assessment

• How often: Once a year.
• The method: You add up all your income and expenses for the past tax year and type the final numbers into HMRC’s online portal (or fill out a paper form).
• Record keeping: Completely up to you. You can use paper notebooks, spreadsheets, or keep receipts in a shoebox until January.

Making Tax Digital for Income Tax (MTD for ITSA)

• How often: Four short quarterly updates throughout the year, plus one final summary by 31 January.
• The method: You must use special, HMRC-approved accounting software (like QuickBooks, Xero, or FreeAgent) or bridging software to send your numbers directly to the government. You can no longer use the old HMRC online portal.
• Record keeping: Must be entirely digital. You are required to log your sales and expenses in your software close to when they happen.

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When Do the Rules Change? (The 2026 Timeline)

Because changing how millions of people do their taxes is a huge task, HMRC is rolling this out in phases based on your total “qualifying income” (your total gross income from self-employment and property combined, before any expenses are taken off).

Since we are currently in April 2026, the very first phase of this new system has just officially started!

Here is the timeline:

Your Total Annual Income	When You Must Use Making Tax Digital
Over £50,000	Started 6 April 2026 (Now mandatory)
Over £30,000	Starts 6 April 2027
Over £20,000	Starts 6 April 2028
Under £20,000	No current changes; keep using standard Self-Assessment

Note: HMRC looks at your old tax returns to figure out if you hit these thresholds. For the April 2026 start date, they based it on the income you reported in your 2024–2025 tax return.

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What Do You Actually Have to Do?

If you fall into the £50,000+ bracket and are now under the MTD rules, or if you are preparing for 2027, here are the simple steps you need to take:

1. Ditch the Paper and Spreadsheets: You need to start using MTD-compatible software to track your money. Manual typing from a spreadsheet into the HMRC website is no longer allowed.
2. Track as You Go: Instead of waiting until January, connect your business bank account to your software so it tracks your income and expenses automatically. You can also take photos of your receipts using your phone, which the software will save digitally.
3. Send Quarterly Updates: Every three months, your software will tally up your digital records and send a quick summary to HMRC. This is just a progress report—it does not mean you have to pay your tax bill four times a year!
4. Send a Final Declaration: At the end of the tax year, you will use your software to add any final bits of income (like savings interest or investments), claim your tax reliefs, and submit your final declaration by 31 January. You will then pay your tax bill just like you always have.

The Bottom Line

Making Tax Digital might feel like a big hurdle at first, but it is ultimately just a shift from doing your taxes once a year on the HMRC website to doing them in smaller chunks using smart software. If you haven’t yet, now is the perfect time to find an easy-to-use accounting app or chat with an accountant to get your digital records set up.

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