Tax can feel complicated at the best of times. Now, HMRC is changing tax rules, and for most self-employed people and landlords, those changes are just around the corner in April at the start of the 2026/27 tax year.

Making Tax Digital for Income Tax (MTD for IT) is the biggest overhaul to Self-Assessment in a generation. If it applies to you, it will change how you keep your records, how often you report to HMRC, and how your annual tax return is submitted. At ANY Accounting & Bookkeeping Services, we are here to explain what these changes mean for you and help ease the transition into the fully digital tax era.

This guide explains what MTD for Income Tax is, who it affects, what you will need to do differently, and how ANY Accounting & Bookkeeping Services will support you every step of the way.

What Is Making Tax Digital for Income Tax?

Making Tax Digital (MTD) is a government initiative to modernise the UK tax system. MTD for VAT has already been in place for several years, and MTD for Income Tax is the next phase. Its aim is to reduce errors, improve accuracy, and give both taxpayers and HMRC a clearer, more current picture of income and tax liabilities throughout the year.

Under the new system, paper-only records will no longer be acceptable, and the traditional annual Self-Assessment tax return will be replaced by a combination of quarterly digital updates and a year-end final declaration.

When Does MTD Take Effect?

It is important to be clear on timing, because there is some understandable confusion.

The 2025/2026 tax year (ending 5 April 2026) is a completely standard Self-Assessment year. Nothing changes. You will file one annual tax return with HMRC as normal, submitted by the deadline of 31st January 2027. MTD for Income Tax does not come into effect until 6th April 2026, at the start of the 2026/2027 tax year.

This means the two tax systems will overlap. You will need to begin filing quarterly reports for the 2026/27 tax year under the new system whilst preparing your return for the 2025/26 tax year, to be submitted by 31st January 2027. That is why we recommend onboarding with an accountant who can help you manage the additional admin whilst the old and new tax systems are overlapping.

Moving forwards, the rollout for MTD is scheduled to happen in two phases, based on income level:

  • From 6 April 2026: Mandatory for individuals with combined gross income from self-employment and/or property over £50,000.
  • From 6 April 2027: Mandatory for those with combined gross income over £30,000.
  • Under £30,000: There is currently no confirmed requirement yet. Those earning below £30,000 may be brought in at a later stage, but no firm date has been set. You have the option to sign up voluntarily.

These thresholds apply to gross income, before expenses are deducted. If you have both self-employment income and rental income, the two are combined when assessing which threshold applies to you.

One important point: once you are brought into MTD, you remain in the system and must continue using digital records. You will only be able to stop filing under MTD if your income falls below the threshold for three consecutive years, or the business or property has permanently ceased.

General partnerships and certain other complex cases are not yet mandated, with separate timetables still to be confirmed by HMRC.

what do i need to do for making tax digital

What Will MTD Actually Change?

MTD for Income Tax introduces four new core requirements, which together replace the current single annual Self-Assessment return.

Digital Record-Keeping

Paper records alone will no longer be sufficient. All income and expenses must be recorded digitally — either directly in MTD-compatible software, or in spreadsheets that are linked to compatible bridging software. We encourage monthly uploads of all records to our system, allowing you to keep on top of everything instead of rushing to submit at the end of each quarter.

Quarterly Updates

A summary of income and expenses must be submitted to HMRC every quarter. These updates are cumulative and must be submitted for each separate business or property income source you have. The quarterly deadlines fall on the 7th of the month following the end of each quarter:

  • 7th August
  • 7th November
  • 7th February
  • 7th May

End of Period Statement (EOPS)

At the end of the tax year, each business or property source requires an End of Period Statement. This is where accounting adjustments, allowances, and reliefs are finalised for that income source. Think of this as a tidy-up to check everything is in order before the overall declaration is made.

Final Declaration

The Final Declaration is the MTD equivalent of the current SA100 Self-Assessment return. It brings together all income sources into one annual confirmation for HMRC. The deadline remains 31st January following the end of the tax year.

For example:

  • Someone who is self-employed — such as an influencer, freelancer, contractor, or CIS worker — will need to submit four quarterly reports, one End of Period Statement, and one Final Declaration: six submissions to HMRC in total.
  • Someone with one business source and one rental property will be submitting eight quarterly updates, two End of Period Statements, and one Final Declaration: eleven submissions to HMRC in total.

Whilst it sounds like a lot, the new MTD system relies on small, frequent updates rather than one big rush at the end of the year. This will make tracking expenses easier and make your end-of-year taxes much more predictable, allowing you to save for your tax bill more easily.

Making Tax Digital Exemptions

If MTD would be genuinely impractical for you — for example due to a disability, a religious objection to using computers, or an inability to access the internet — you may apply to HMRC for an exemption on grounds of digital exclusion. Approval is not automatic and must be sought directly from HMRC.

How to Prepare: Five Steps to Take

The sooner you begin, the more straightforward the transition will be.

  1. Work out whether MTD applies to you. Check your 2025/2026 gross income from self-employment and property. If that figure exceeds £50,000 and you expect this year’s income to be similar, you will need to begin your quarterly updates from 6 April 2026. If your income was between £30,000 and £50,000, you will start in April 2027. If you are not certain, speak to us and we will confirm your position.
  2. Start keeping detailed records if you do not already. MTD rewards those who track income and expenses carefully throughout the year. If your record-keeping becomes a scramble at tax season, now is the time to get into good habits using MTD-compatible software.
  3. Plan for quarterly reporting. Build the quarterly deadlines into your calendar now. We recommend monthly tracking at the very least, to prevent a last-minute rush every quarter.
  4. Note the key dates for the 2026/2027 tax year. For those entering MTD from 6 April 2026, the first quarterly update covers 6 April to 5 July 2026, with a submission deadline of 7 August 2026.
  5. Speak to ANY Accounting & Bookkeeping Services. We are already set up for MTD and ready to guide you through the change. The earlier we begin planning together, the smoother the process will be.

Our Simple Monthly Upload

We provide all our clients with a simple, secure online portal where you can upload your records on a monthly basis. Uploading monthly means that by the time each quarterly submission window arrives, the work is largely already done — no stressful last-minute hunting around for documents. If you are ever unsure what to upload or how to categorise something, we are always on hand to help.

Our Fees: Clear, Fixed, and Inclusive

We believe in transparent pricing with no surprises.

  • 2025/2026 tax year (standard Self-Assessment): £435 + VAT
  • 2026/2027 onwards (MTD): £500 + VAT per year

The MTD fee covers everything in one fixed price with no hidden extras, including:

  • MTD setup
  • All four quarterly submissions
  • End of Period Statement
  • Final Declaration
  • Routine support throughout the year

These fees assume records are provided in an agreed digital format and that there are no capital gains, rental or foreign income, complex disclosures, or HMRC enquiries. Additional charges may apply where work falls outside of this scope.

Ready to Get Started?

MTD for Income Tax is a significant shift — a complete overhaul to how you have been managing your taxes for years. It requires more attention throughout the year and more regular updates, but our team is fully prepared to support you throughout the whole process.

If you would like to understand exactly how MTD applies to your circumstances, or if you would like to get ahead before April 2026, please get in touch today to arrange a meeting with a tax adviser at our Chorley accountancy offices.

 

Frequently Asked Questions about Making Tax Digital

Do I need to do anything differently for my 2025/2026 tax return?

No. The 2025/2026 tax year is a standard Self-Assessment year. You will file one annual tax return as normal, with a deadline of 31 January 2027. MTD does not begin until 6 April 2026, which is the start of the 2026/2027 tax year.

HMRC will assess your position based on your 2024/2025 Self-Assessment return, due 31 January 2026. If your combined gross income from self-employment and/or property exceeds £50,000, you will be required to join MTD from 6 April 2026. We can confirm your position for you — just get in touch.

The threshold applies to gross income (that is, before expenses) from self-employment and UK property. If you have both, the two are added together. Investment income, employment income, and pension income are not included in the threshold calculation, though they will still be declared in your Final Declaration.

Once you are in MTD, you remain subject to its requirements even if your income falls below the threshold. You may only exit the system after your income has remained below the applicable level for three consecutive tax years.

Yes, but with conditions. Spreadsheets must be digitally linked to MTD-compatible bridging software. You cannot maintain a spreadsheet and then manually re-enter figures into a separate system — the digital link between your records and the HMRC submission must be maintained throughout. We can advise on the most practical solution for your circumstances.

You will make four quarterly updates for each business or property income source, plus one End of Period Statement per source, plus one Final Declaration. For someone with a single self-employment business and no property income, that is six submissions per year. For those with multiple income sources, the number will be higher.

MTD uses a points-based penalty system. Each missed submission earns one penalty point; once four points have accumulated, a £200 fine is issued. Points can expire after a period of sustained compliance. Those entering MTD from April 2026 will benefit from a soft-landing period during which no penalty points will be issued for late quarterly updates in the first year. Standard late filing and payment penalties continue to apply to the Final Declaration.

HMRC recognises that digital compliance may be impractical for some individuals due to disability, religious belief, or a lack of internet access. Exemptions can be applied for directly with HMRC, subject to approval. If you think this may apply to you, please speak to us.

No. Your tax payment deadlines remain exactly the same: the balance of any tax owed is due on 31 January following the end of the tax year, with payments on account due on 31 January and 31 July where applicable.

We handle the process end to end. We will set you up on the appropriate MTD-compatible software, submit all quarterly updates to HMRC on your behalf using our simple client portal, prepare your End of Period Statement and Final Declaration, and provide routine support throughout the year. Our fee is a single fixed annual rate of £500 + VAT. Please note that these fees assume records are provided in an agreed digital format and that there are no capital gains, rental or foreign income, complex disclosures, or HMRC enquiries. Additional charges may apply where work falls outside of this scope.

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