Making Tax Digital for Income Tax

Making Tax Digital for Income Tax (MTD) is a new HMRC system that will change how self-employed individuals and landlords report their income.

What You Need to Know

From April 2026, HMRC will introduce new rules called Making Tax Digital (MTD) for Income Tax. These rules will change how some individuals report their income to HMRC.

MTD is designed to move the tax system towards digital record keeping and more frequent reporting.

Who will be affected by Making Tax Digital for Income Tax

From 6 April 2026, Making Tax Digital will apply to individuals who have more than £50,000 of gross income from:

  • self-employment

  • property rental income

The threshold will reduce to £30,000 from April 2027.

Income such as employment, dividends and bank interest does not count towards this threshold.

What will change

Currently, most taxpayers submit one Self Assessment tax return each year.

Under MTD, individuals within the rules will need to submit information to HMRC throughout the year using compatible software.

This involves:

  • Four quarterly updates summarising income and expenses

  • An End of Period Statement confirming the final business figures

  • A Final Declaration confirming all income for the tax year

What’s due when

End of Period Statement: due 31 January

Final Declaration: due 31 January

Final Declaration

The Final Declaration replaces the current Self Assessment tax return. It confirms the taxpayer’s full income position for the year, including:

  • employment income

  • dividends

  • interest

  • pensions

  • business and property income

The deadline for the End of Period Statement and Final Declaration remains 31 January following the end of the tax year.

Will payments change

HMRC have confirmed there are no plans to change the way tax liabilities are paid.

Digital Record Keeping

MTD requires taxpayers to keep digital records and submit information using compatible software.

This does not necessarily mean moving to full bookkeeping software. In some cases, spreadsheets can still be used alongside bridging software that submits the required information to HMRC.

End of Period Statement

After the tax year ends, the End of Period Statement is submitted. This confirms the final business figures and includes adjustments such as:

  • capital allowances

  • accounting adjustments

  • disallowable expenses

How we can help with Making Tax Digital

Making Tax Digital for Income Tax will change how many self-employed individuals and landlords report their income to HMRC. We can help you prepare for these changes by confirming whether the rules apply to you, setting up the required digital record-keeping and managing the quarterly submissions.

We will also take care of the year-end reporting and final declaration so that you remain fully compliant while keeping the process as simple as possible.

MTD Support

Our MTD Support service is designed for clients who already maintain their own records, for example using a spreadsheet or bookkeeping software, and simply require us to handle the required submissions to HMRC.

Under this service we will review your figures and submit the quarterly updates required under Making Tax Digital. This option is suitable for clients who are comfortable managing their own day-to-day record keeping but would like the reassurance of professional support for the reporting requirements.

You prepare and maintain

✔ Registration for MTD

✔ Bookkeeping records

✔ Records on MTD compliant software

✔ Quarterly MTD submissions

Our services include

✔ End of period statement

✖ Final declaration

Best for: clients who keep their own records and only need help with submission

MTD Enhanced

Our MTD Enhanced service provides additional guidance throughout the year to help ensure your records are kept correctly and that the new digital requirements are met.

In addition to managing the quarterly submissions and year-end filings, we will provide support with your digital record keeping and answer any queries that arise during the year. This option is ideal for clients who want more ongoing assistance to stay compliant with the new rules.

You prepare and maintain

✔ Bookkeeping records

Our services include

✔ Registration for MTD

✔ Records on MTD compliant software

✔ Quarterly MTD submissions

✔ End of period statement

✖ Final declaration

Best for: clients who want reassurance and help

MTD Complete

Our MTD Complete service is a fully managed solution for clients who would prefer us to take care of everything.

We will maintain your digital records, prepare the necessary information and submit all required updates to HMRC throughout the year. This includes the quarterly submissions, end-of-year statement. This option allows you to focus on your business while we handle the administrative and reporting requirements of Making Tax Digital.

You prepare and maintain

✔ Copies of invoices/receipts/bank statements provided electronically

Our services include

✔ Registration for MTD

✔ Bookkeeping records

✔ Records on MTD compliant software

✔ Quarterly MTD submissions

✔ End of period statement

✖ Final declaration

Best for: clients who want a fully managed service

Other charges

  • Final declaration priced based on other income to be declared on the final declaration.

  • MTD bridging software to be charges separately our preference is Xero however we can work with other software providers and spreadsheets.

FAQs

Will i still need to submit a tax return?

1

Yes. Under Making Tax Digital you will submit four quarterly updates during the year, followed by an End of Period Statement and a Final Declaration, which replaces the traditional Self Assessment tax return.

Do I need to use accounting software?

2

Making Tax Digital requires records to be kept digitally and submitted using compatible software. This can include accounting software or spreadsheets that link to HMRC through bridging software.

What information needs to be submitted quarterly?

3

The quarterly updates will include a summary of income and expenses for the period. These updates give HMRC an estimate of your tax position during the year but do not finalise the tax calculation.

Need advice

If you would like to discuss whether Making Tax Digital will affect you, please contact us to arrange a consultation.