Making Tax Digital (MTD) is the Government’s initiative designed to streamline and digitise tax reporting in the UK.

While the MTD scheme has been in force for the past few years, changes are approaching, particularly for sole traders, self-employed individuals, and landlords.

Below, we outline clearly what MTD is, who it affects, the upcoming changes, and the steps you need to take to prepare.

For more in-depth information, please see our full Making Tax Digital guide [link to guide] or view our MTD roadmap infographic [link to infographic].

What is Making Tax Digital

MTD is intended to modernise the tax system by requiring digital record-keeping and regular digital submissions.

It is designed to increase accuracy, improve efficiency, and give taxpayers clearer visibility of their tax position throughout the year.

When do the MTD changes start?

The next phase of MTD (MTD for Income Tax Self-Assessment (ITSA)) comes into effect from April 2026 and will impact:

• Sole traders
• Self-employed individuals
• Landlords

You will be affected if your income from self-employment or property exceeds £50,000 per year, whether combined or from one or the other.

This threshold will reduce to £30,000 from April 2027, and as announced in this year’s Spring Statement, the threshold will drop again to £20,000 in April 2028.

HM Revenue & Customs (HMRC) will begin notifying those affected from April 2025 based on your 2023-24 Self-Assessment return.

What exactly is changing?

Under MTD for ITSA, from April 2026, you will need to:

• Keep digital records of your income and expenses
• Submit quarterly updates to HMRC using approved MTD-compatible software
• Complete an end-of-period statement (EOPS) and submit a final declaration annually

This new process means tax information is updated more regularly, enabling better management of your tax obligations throughout the year.

How to prepare for Making Tax Digital

Here is what you can do now to ensure a smooth transition:

Check if you are affected

Determine if your income from self-employment or property exceeds £50,000 per year.

HMRC will be contacting affected taxpayers from April, but it is beneficial to understand your position early.

Choose appropriate software

You must use MTD-compatible software to maintain digital records and submit quarterly updates. If you need advice or assistance choosing the right software, we can help.

Decide when to sign up

HMRC offers two sign-up options:

• Early sign-up (2025-26 tax year) – This allows you additional time to adjust, along with access to HMRC’s specialist support.
• Standard sign-up (2026-27 tax year) – You can wait until April 2026 to comply.

Explore exemptions

Some individuals may qualify for exemptions due to age, disability, or lack of access to digital tools.

If you believe an exemption may apply to you, we can assist in assessing eligibility and applying on your behalf.

How we can help

Our expert team is here to support you throughout your transition to Making Tax Digital. We offer personalised help to:

• Establish compliant digital record-keeping practices.
• Select and integrate suitable MTD-compatible accounting software.
• Provide ongoing guidance and ensure your quarterly submissions are accurate and hassle-free.

Act early and avoid the stress

The rules may not take effect until April 2026, but starting your preparation now can reduce stress and ensure you are confidently ready for the transition.

Contact us today for help and assistance with anything related to MTD and discover how we can make sure you are prepared for the changes.