What is Making Tax Digital for Income Tax and When Does It Start?
Making Tax Digital for Income Tax is a government initiative requiring certain businesses and landlords to keep digital records and submit updates to HMRC every quarter.
When does it start?
£50,000
£30,000
How we'll support you and impact on your fees
As we already manage your bookkeeping and quarterly VAT returns, we'll handle all Making Tax Digital For Income Tax quarterly filings for you on your behalf.
The first quarterly return due, will be for the period 1 April 2026 to 30 June 2026, due to be filed with HMRC by 7 August 2026.
We will continue to prepare and file your year-end Self Assessment return, now referred to as your Final Declaration, as usual. The Final Declaration will confirm your annual tax position with HMRC.
The first step is getting you registered for Making Tax Digital For Income Tax (MTD IT) with HMRC. This is a one-off setup process that gets everything ready for online filing.
Because Making Tax Digital For Income Tax means more frequent reporting, there will be an increase in your quarterly fees.
We will commence the registration of our clients for Making Tax Digital for Income Tax (MTD IT) with effect from 6 April 2026. Should you not wish us to register you with HMRC for MTD IT, or to act on your behalf in relation to the preparation and filing of the quarterly MTD IT returns, please notify us using the ‘Get In Touch’ section below.
If we do not hear from you by 6 April 2026, we will proceed on the basis that you are happy with the arrangements outlined above.
You can help keep costs as low as possible by:
Using a single business bank account (and credit card if applicable) for business expenses only.
We work in partnership with online banks such as Monzo, Starling, and Tide. Please feel free to get in touch if you'd like to discuss this further.
Capturing receipts and invoices through Hubdoc or Dext. If you are not set up with Hubdoc or Dext, please let us know.
Sending us your records promptly, ideally monthly, so we can stay up to date.
Enabling direct bank feeds and automating data collection where possible.
Rental income? If you have rental income and your property is managed by a managing agent, please ensure that we are copied on the monthly rental statements at rs_agents@blinkhorns.co.uk.
Get in Touch
Our bookkeeping team may already have contacted you about these steps. Acting now will make the transition smoother and will also help to minimise the additional costs involved, which we will outline in more detail in subsequent messages.
If you'd like to know more about Making Tax Digital for Income Tax, or how it affects you, please feel free to contact us and we'll be happy to walk you through the process and answer any questions you have.
Making Tax Digital for Income Tax: Key Information
Expand the sections below to learn more.
Why is Self Assessment changing?
Making Tax Digital for Income Tax (MTD for IT) is HMRC's digital replacement for the traditional Self Assessment system and is part of the government's plan to digitalise the UK tax system. The key reasons for the change include reducing tax errors through digital systems, closing the tax gap with more accurate reporting, aligning tax reporting with modern digital business tools, and making tax compliance easier and more efficient overall.
How does Self Assessment currently work?
The current Self Assessment system requires one annual tax return submission. You can submit via the HMRC online portal, paper forms by post, compatible software, or through your accountant or bookkeeper. The key deadlines are 31 October for paper submissions and 31 January for online submissions. You keep digital or paper records throughout the tax year and compile them into one annual return at the end of the year.
How will MTD for Income Tax change Self Assessment?
MTD for Income Tax changes how you submit your tax information. Instead of one annual return, you will send regular digital updates:
- HMRC's online portal will be replaced by MTD IT-compatible software
- Paper filing will be replaced by digital submissions
- Annual-only reporting will be replaced by quarterly updates
- You'll submit four quarterly updates using MTD IT-compatible software throughout the tax year
- You'll still submit one final declaration by 31 January for additional income sources such as savings and investments
- Digital record-keeping becomes mandatory — records must be maintained in compatible software
What software do I need for MTD for Income Tax?
You'll need software that's compatible with HMRC's systems. This software must be able to keep digital records and send your quarterly updates and final declaration directly to HMRC.
A full list of approved software by HMRC can be found here: Find software that works with Making Tax Digital for Income Tax →
Are there any benefits to the changes?
MTD for Income Tax offers several advantages:
- Real-time tax estimates: HMRC provides ongoing tax liability estimates so you can prepare for tax bills throughout the year
- Error correction: Mistakes can be fixed in your next quarterly update rather than waiting until the end of the year
- Improved business insights: Quarterly reporting encourages consistent record-keeping and regular financial reviews
What if I have more than one business?
If you have more than one self-employed business or property, or are both a sole trader and a landlord, you combine the income and expenses from all of them and send one set of quarterly updates to HMRC for all your business activities. You'll only need to submit one final declaration that covers all income sources.
Do I need to keep paper receipts with MTD IT?
No. The rules require digital records, which means you can take photos of your receipts to create digital copies. Once you have a digital version stored securely, you can dispose of the paper receipt — the digital copy satisfies HMRC's record-keeping requirements. Tools like Hubdoc and Dext make this easy.
What if my income is below the MTD IT thresholds?
If your income from self-employment or property rental doesn't exceed the MTD IT thresholds (starting at £50,000 from April 2026), you'll continue using the current Self Assessment system with no changes to how you file your annual tax return.
Further reading
For a detailed overview of Making Tax Digital and self-assessment changes, the following HMRC’s pages may be helpful:
Making Tax Digital for Income Tax for sole traders and landlords: step by step →
Find out if and when you need to use Making Tax Digital for Income Tax →
Use Making Tax Digital for Income Tax →