Making Tax Digital for Income Tax

 

  •  3 minutes

3 minutes

From April there will be a new way to report income and expenses if you are a sole trader or landlord. It is called Making Tax Digital for Income Tax, or also known as MTD for Income Tax. This page explains what you need to know including who it affects, when and how it works.

How it works

Making Tax Digital is a new way to record and report your income and expenses if you are a sole trader or landlord.

It means you won't fill out your tax return all at once. Instead, you'll use recognised software on your phone or laptop to record your income and expenses, and then send them to HMRC through quarterly updates straight from your software. The quarterly updates are not tax returns - they are summaries of your income and expenses, and they will enable you to see an estimate of your tax bill after each one, helping you plan ahead.

You will still need to submit your tax return by 31 January.

Who it affects and when it starts

Making Tax Digital only affects sole traders and landlords. HMRC are rolling it out in phases based on your turnover:

  • 6 April 2026 if your turnover is above £50,000
  • 6 April 2027 if your turnover is above £30,000
  • 6 April 2028 if your turnover is above £20,000

Information:

HMRC will work out your start date but they will not sign you up automatically, If you're required to use Making Tax Digital for Income Tax from 6 April 2026, you should sign up before that date so you are prepared. You can find more information on how to sign up for MTD for Income Tax on gov.uk.

Choosing software

You'll need to choose recognised bookkeeping or accounting software that you can use on your phone or laptop.

There are two different kinds of software, and the software you should choose depends on your individual circumstances.

  • Software that creates digital records - this might be right for you if you want one software product that will meet all the requirements, or if you have more complex tax affairs.
  • Software that connects you to your records, known as bridging software - this might be right for you if you have less complicated tax affairs, you want to keep using your current non-MTD compatible accounting software, or you want to keep your digital records on a spreadsheet.

You can use a combination of different software, if that works better for you.

Depending on your individual requirements, there are both free and paid software options available. Some software includes additional features like built-in reminders, or phone camera receipt scanning.

Find out more about choosing the right software, or how to use the software finder tool to help you find compatible software that meets your needs.

Further guidance

For more details gov.uk have a dedicated site for Making Tax Digital for Income Tax where you can find more detailed information.

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