What is Making Tax Digital for Income Tax?

Making Tax Digital for Income Tax (MTD) is HMRC's new system for keeping digital records and reporting information about self-employment and property income.

It is being introduced in stages. You'll need to use MTD if your total qualifying income from self-employment and property is more than:

• £50,000 for the 2026/27 tax year
• £30,000 for the 2027/28 tax year
• £20,000 for the 2028/29 tax year
• 
  

The threshold is based on your gross qualifying income before expenses, rather than your profit.

For example, if you receive £35,000 from self-employment and £20,000 in gross rental income, your qualifying income would be £55,000.

What will I have to do under MTD?

If MTD applies to you, you'll need to keep digital records using compatible software.

You'll also need to send HMRC quarterly updates containing summary information from your digital records.

The standard quarterly deadlines are:

7 August, 7 November, 7 February and 7 May.

These updates are not four additional tax returns. They provide HMRC with information from your digital records during the year.

You'll still need to complete your final tax return after the end of the tax year, and the normal 31 January filing and payment deadline continues to apply.

Can I do Making Tax Digital myself?

Yes.

If you're comfortable maintaining accurate bookkeeping records, using MTD-compatible accounting software and dealing with HMRC's reporting requirements, there's nothing to prevent you from managing MTD yourself.

For some sole traders and landlords with straightforward affairs, that may work perfectly well.

However, MTD does mean that bookkeeping needs to be kept up to date throughout the year rather than being dealt with only when it's time to prepare your tax return.

That's where some people may prefer to have help.

What can an accountant do for MTD?

An accountant can help you choose and set up suitable accounting software, make sure your bookkeeping records are being maintained correctly and deal with the required submissions to HMRC.

More importantly, having accurate and up-to-date records throughout the year can give you a much clearer picture of how your business is performing and how much tax you may need to put aside.

So MTD doesn't necessarily have to mean more administration for you.

What if I currently give my accountant my records once a year?

If you're used to collecting your invoices, receipts and bank information and giving everything to your accountant after the end of the tax year, MTD is likely to require a change in the way your records are maintained.

Because digital records need to be kept and information submitted during the year, leaving everything until January will no longer be practical for people within MTD.

The good news is that getting the right system in place can make the process considerably easier.

How can Tunstall Accounting help?

I work with sole traders and landlords in Rotherham and the surrounding areas and can help you prepare for Making Tax Digital before the new rules affect you.

I can help you understand when MTD will apply to you, get your bookkeeping and accounting software set up correctly, maintain your records if required and deal with the relevant HMRC submissions on your behalf.

You'll deal directly with me, so you'll always know who is looking after your accounts and who to contact when you have a question.

If you're unsure whether Making Tax Digital will affect you, or you'd like to get everything organised before it becomes compulsory, get in touch with Tunstall Accounting.