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Mar 9 2026

Making Tax Digital Is Coming This April

What Exactly Is Making Tax Digital for Income Tax? 

Making Tax Digital is HMRC’s long-term programme to modernise tax administration, moving away from paper-based or annual Self-Assessment filings towards real-time digital reporting. Having already transformed VAT for many businesses since 2019, MTD now extends to Income Tax Self-Assessment for individuals.

Making Tax Digital for Income Tax Self Assessment (MTD ITSA) can also be referred to as MTD Income Tax (MTD IT) and MTD for Income Tax (MTDFIT). For the purposes of this update, we will use the term MTDFIT throughout.

Under MTDFIT, you will need to keep your business records digitally and submit regular updates to HMRC throughout the year, rather than waiting until the traditional January deadline. This helps taxpayers get their tax right first time, reduces errors, and gives HMRC better data to close the tax gap. 

The system requires MTD-recognised software to record income and expenses, send quarterly summary updates, and file a final declaration at the end of the tax year. It is designed to make tax simpler in the long run, though the initial switch requires some effort, especially if you are currently relying on spreadsheets, paper records, or basic tools.

Are You Ready?

We are now just over a month away from one of the biggest changes to the UK’s tax system in years. From 6 April 2026, Making Tax Digital for Income Tax (MTDFIT) becomes mandatory for many sole traders and landlords. If your qualifying income from self-employment and/or property exceeded £50,000 in the 2024/25 tax year (or relevant earlier periods), you will need to start using MTD-compatible software right from the beginning of the new tax year. 

At Jan McDermott Chartered Accountants, your friendly and experienced chartered accountants based in Wirral we have expertise in cloud accounting, Xero implementation, and tax compliance. We are perfectly placed to help you transition smoothly. In this updated guide, we will explain exactly what MTDFIT involves, who it affects now, the key requirements, benefits, preparation steps, and how we can support you to stay ahead. 

who must comply

Who Must Comply from 6 April 2026?

The rollout is phased by income level, with the first mandatory group starting this April. 

  • From 6 April 2026: Sole traders and landlords with total qualifying gross income (from self-employment and/or property) over £50,000 must enrol for MTD. This threshold is based on your income in the 2024/25 tax year. 
  • From 6 April 2027: The threshold drops to £30,000, based of your income in the 2025/26 tax year. 
  • From 6 April 2028: The threshold drops to  £20,000, based of your income in the 2026/2027 tax year. 

If your income is below £50,000 now, you may still be affected in future years, so it is wise to plan. Some groups are exempt or subject to different rules, including individuals who are digitally excluded (for example due to age, disability or location an exemption can be applied for), certain trusts and estates, and non-residents in specific circumstances. 

One third of our clients across Wirral and Merseyside who are either property landlords and/or are self-employed professionals, fall into this first wave.  

If you’re unsure about your position, check your records or contact us for a quick review.

The Core Requirements Under MTDFIT

From 6 April 2026, you’ll need to: 

  1. Maintain digital records for all relevant income and expenses using MTD-compatible software. No more relying solely on paper or non-linked spreadsheets. 
  2. Submit quarterly updates to HMRC, four per tax year, summarising your income and expenses for each period. 
  3. File a final declaration by 31 January following the tax year, which finalises your tax position and allows any adjustments. 

Software must connect directly to HMRC via their API for submissions. Popular options include Xero, Quickbooks Online, and more

Deadlines are firm: For the 2026/27 tax year starting in April, your first quarterly update will be due at the beginning of August 2026. Late submissions attract penalties starting at £200, with points-based escalation for repeated issues. HMRC has indicated a soft start with no penalty points for the first year in some cases, but don’t rely on leniency and get set up properly. 

core requirements

Why MTD Could Actually Benefit Your Business

Change can feel overwhelming, but MTD brings real advantages once you’re up and running: 

  • Better financial visibility: Real-time data on income, expenses, and cash flow helps you make informed decisions all year round. 
  • Fewer mistakes: Automated categorisation and direct HMRC links cut down on manual errors that lead to penalties or overpayments. 
  • Improved cash flow planning: Provisional tax calculations throughout the year mean no nasty surprises in January. 
  • Time savings in the long term: Less scrambling at year-end; more focus on growing your business. 
  • Eco-friendly: Reduced paper use aligns with sustainable practices. 

For sole traders and landlords, key groups we support at Jan McDermott Chartered Accountants, these benefits often translate to stronger business management and peace of mind. 

Step-by-Step: How to Get Ready Before 6 April

With only weeks to go, here’s a focused action plan: 

  1. Confirm your status: Review your 2024/25 income figures. Use HMRC’s online eligibility checker or ask us to assess. 
  2. Select compatible software: We strongly recommend Xero for its user-friendliness, bank feeds, and seamless MTD integration. As Xero Certified Advisors, we can handle setup and migration. 
  3. Digitise your records: Gather receipts, invoices, and bank statements. Set up automatic feeds where possible and categorise historical data.  
  4. Sign up early: Register for MTD via your HMRC online account before April to test and prepare. 
  5. Train and test: Learn the basics or get professional training. Run trial quarters in your software to build confidence. 
  6. Engage expert support: Don’t go it alone if you’re unsure. Our team can manage the full transition, from software choice to compliance checks. 

Start these steps now, the earlier you begin, the less pressure you’ll feel as the deadline approaches. 

Overcoming Common Concerns

  • Learning curve: Software can seem intimidating. Our tailored Xero training sessions make it straightforward. 
  • Costs: Setup and subscriptions are tax-deductible, and long-term efficiency gains often offset them. 
  • Data security: Use reputable cloud platforms with strong encryption and regular backups. 
  • Time pressures: If you’re too busy, outsource bookkeeping to us, we keep everything MTD-compliant. 
  • Complex situations: Mixed income sources need careful handling; we specialise in these. 

By tackling these early, you turn compliance into an opportunity. 

Partner with Jan McDermott Chartered Accountants for a Smooth Transition

As Wirral-based Chartered Accountants we offer practical, proactive support to sole traders, landlords, start-ups, and high net worth individuals across the UK. 

Our key MTD-related services include: 

  • Xero implementation, training, and ongoing support 
  • Digital bookkeeping and payroll 
  • Tax planning and compliance advice 
  • Virtual finance director services using your live data 
  • Full tax return preparation and submissions 

We are here to make MTDFIT straightforward and even advantageous for your situation. Contact us today for a no-obligation chat or free initial review, let’s ensure you’re fully ready by 6 April. 

Making Tax Digital for Income Tax starts for many on 6 April 2026. With preparation, it can simplify your tax life rather than complicate it. Don’t leave it to the last minute, reach out to Jan McDermott Chartered Accountants now and step confidently into the new digital tax era.