Getting ready for Making Tax Digital for Income Tax - MTD for IT

General
Written By Carolyn Downes

HM Revenue & Customs’ (HMRC) Making Tax Digital initiative has been gradually evolving for several years now. But did you know that it will soon be mandatory for landlords and small businesses that pay tax through self-assessment to use HMRC’s digital tax system?

Making Tax Digital for Income Tax (or MTD for IT, as it’s more commonly known) is likely to be a major change for some taxpayers.

So, are you ready for the upcoming MTD for IT rules?

What is MTD for IT?

Making Tax Digital (MTD) aims to bring tax into the digital age, moving from annual paper and online tax submissions to quarterly digital uploads of your tax information.

Having to keep detailed digital records sits at the heart of MTD. Taxpayers will need to record all incoming and outgoing transactions using compatible accounting software, and then share this information in an approved digital format with HMRC.

Who will be affected by the MTD for IT rules?

MTD for IT is already at the beta testing stage and some self-assessment taxpayers have opted in to the system already.

But if you’re a landlord or sole trader who falls into the following categories, MTD for IT will soon become a mandatory requirement:

From April 2026, for those with qualifying income over £50,000

From April 2027, for those with qualifying income over £30,000

Come and talk to us!

We have been preparing for the introduction of MTD for IT for a while now, and have solutions for all our clients, whatever the circumstances!

We can advise you on the best accounting software and give you guidance on upgrading and preparing your bookkeeping, accounting and tax procedures for MTD for IT.

How do you get ready for MTD for IT?

If you’re already using cloud accounting software to manage your finances, MTD for IT won’t be a major challenge. You’re already recording your numbers in a digital format and most of the popular accounting platforms will have MTD for IT templates you can fill out. But if you’ve not embraced the latest in accounting tech or keep paper records, it’s important to consider the options as soon as possible.

To stay compliant, you’ll need to:

  • Keep your records in a digital format

  • Provide digital quarterly updates to HMRC

  • Be able to provide your IT return information to HMRC through MTD-compatible software.

  • Talk to us about preparing for MTD for IT

Carolyn Downes
Next

Providing Employment Benefits: what’s taxable?