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Making Tax Digital for Income Tax
One tax return a year becomes four updates plus a final declaration. Here is what actually changes.
If you are a sole trader or a landlord with income over the threshold, you will send HMRC a summary of your income and expenses every three months instead of filling in one tax return each year. You will need to keep digital records, and use software that can submit them. HMRC is phasing this in by income band from April 2026.
What actually changes
- Four quarterly updates instead of one annual return, sent within a month of each quarter end.
- A final declaration after the year end, which does the job the tax return does now - reliefs, adjustments, other income, and the final figure.
- Digital records. A shoebox of receipts and a mental note is no longer enough on its own; the records behind those updates have to be kept digitally.
- Your tax payment dates do not change. Still 31 January, still payments on account. Quarterly reporting is not quarterly paying.
Why we are telling you a year early
Because the work is in the records, not the filing. Someone who brings us a carrier bag every January can carry on doing that for one annual return. Cut into quarters, the same bag has to be dealt with four times, and the January rush becomes four smaller ones.
The businesses that will find this painless are the ones that spent the preceding year getting their bookkeeping into a shape that can be summarised on demand. That is this year.
What we will do about it
- Tell you whether and when MTD applies to you, from your actual figures.
- Get your record keeping into a form that can produce a quarterly summary without drama - which for most of our clients means us doing the bookkeeping, not you learning software.
- Handle the quarterly submissions and the final declaration.
- Give you a fixed annual price covering all of it, so it is one predictable cost rather than four surprises.
Check it yourself
Does it apply to you?
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Common questions
MTD, without the jargon
Does MTD apply to me?
It depends on your gross income from self-employment and property added together, and on the threshold for the year in question. HMRC is phasing it in from April 2026 by income band, with further bands following. Tell us your figures and we will tell you which start date is yours.
Do I have to buy software?
You need MTD-compatible software to send the quarterly updates - but that does not have to mean you learn a bookkeeping system. If you are our client we handle the submissions; you keep sending us records the way you always have.
Is a quarterly update the same as a tax return?
No. The quarterly updates are summary totals of income and expenses. There is still a final declaration after the year end that pulls everything together, and your tax is still due on 31 January as now.
What happens if I ignore it?
There is a penalty regime with points for late submissions. More practically, a year of records that were fine for one annual return will not survive being cut into quarters. That is the work worth doing now.