Where can I find guidance on Making Tax Digital for income tax?

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The most up-to-date and official rules are found on the GOV.UK website. You should look for the collection titled:

“Making Tax Digital for Income Tax”

Specifically, search for the page “Find out if and when you need to use Making Tax Digital for Income Tax.” This is the definitive source from HMRC that is updated regularly.

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What is Making Tax Digital (MTD)?

For years, many self-employed people and landlords have done their taxes once a year—often in a panic just before the January 31st deadline.

Making Tax Digital for Income Tax (MTD for ITSA) changes this completely. It is a new government rule that replaces the annual Self Assessment tax return with a digital, quarterly system.

Instead of typing numbers into a form once a year, you must:

1. Keep your business records digitally (on a computer or phone app).
2. Send updates to HMRC every three months.
3. Finalise your tax position at the end of the year.

Who does this affect and when?

The rules apply to you if you are a sole trader or a landlord (or both) and your total qualifying income is above certain thresholds.

• From April 2026: You must follow these rules if your qualifying income is over £50,000.
• From April 2027: You must follow these rules if your qualifying income is over £30,000.
• From April 2028: You must follow these rules if your qualifying income is over £20,000.

Note: “Qualifying income” is your total gross income (turnover) from self-employment and property before expenses are taken off.

What do I actually need to do?

If you are in the groups above, you can no longer keep records on paper or simple spreadsheets that aren’t linked to software. You have three main duties:

1. Get Compatible Software: You must use software that can “talk” to HMRC’s computers. You generally cannot sign up through the HMRC website directly; you sign up through the software.
2. Send Quarterly Updates: Every three months, your software will send a summary of your income and expenses to HMRC. This is not a full tax return, but it lets HMRC track your business closer to real-time.
3. Finalise Your Year: By the 31st of January after the tax year ends, you must sign a “Final Declaration” confirming all your data is correct and claiming any personal allowances.

Why You Need a Qualified Accountant

While the government says this system is designed to be “easier,” in reality, it adds a significant layer of administration to your year. This is not just about data entry; it is about compliance.

Here is why hiring a qualified accountant is now more important than ever:

• Software Headaches: There are dozens of software providers. An accountant will recommend the right one for your specific trade—whether you are a plumber, a graphic designer, or a buy-to-let landlord. They can often set it up for you so it works automatically.
• The Penalty Trap: HMRC has introduced a new “points-based” penalty system for late submissions. Because you now have to file four times a year instead of once, you have four times the opportunity to miss a deadline and get fined. An accountant manages this calendar for you.
• Accuracy is Key: If you make a mistake in a quarterly update, it can be messy to fix later. A qualified accountant ensures your figures are right before they go to HMRC, preventing stressful investigations.
• Tax Planning: With real-time reporting, you can see your tax bill growing throughout the year. An accountant can use this data to help you save tax legally and plan your cash flow so you aren’t hit with a surprise bill.

Don’t try to navigate this alone. The cost of an accountant is often far less than the cost of the time you will lose struggling with software or the fines you might face for getting it wrong.

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