Making Tax Digital for Income Tax: Are We Nearly There Yet?

Are We Nearly There Yet?

Well, yes is the answer and Making Tax Digital for Income Tax (MTD for IT) will finally begin from 6 April 2026, when it becomes mandatory for landlords and the self-employed whose gross income is over £50,000 in the tax year just passed 2024/25, with the introduction of quarterly returns.

MTD for IT employment income (PAYE), Dividends, Bank Interest etc. are not part of the requirements, and are reported annually.

The three key components of MTD for IT are individuals will need to:

• Keep digital records on accounting software
• Filing quarterly updates to HMRC
• Submitting a Year end declaration, to HMRC

The timing of tax payments will not change and the current system of payments on account and balancing payment by 31 January after the tax year is expected to remain in place for the foreseeable future.

How Should You Be Getting Ready?

We would suggest the following steps:

• Timely completion of your 2025 self assessment tax return now providing confirmation of whether you are mandated from 6 April 2026.
• If you haven’t already opened a separate bank account for the rental income, this will help streamline the information.
• Look at software packages such as Xero, our Firms preferred choice.
• Consider whether you choose to use this for your bookkeeping (and manage yourself), or whether you want us to use this software to produce your rental/self-employment accounts. Then from April 2027 the income level for MTD for IT will reduce to £30,000 resulting in more individuals falling into the digital system.

Then from April 2027 the income level for MTD for IT will reduce to £30,000 resulting in more individuals falling into the digital system.

Get In Touch

For more information or advice, or to find out how Whitings can assist you, contact your local Whitings LLP office today.

Disclaimer - All information in this post was correct at time of writing.