HMRC to start sending letters with MTD update

If you are self-employed, a sole trader, or a landlord earning more than £50,000 per year, expect a letter from HM Revenue & Customs (HMRC) soon.  

It will outline new digital tax reporting requirements under Making Tax Digital (MTD) for Income Tax Self-Assessment (ITSA), which comes into effect in April 2026. 

What is MTD for Income Tax? 

Currently, you submit a Self-Assessment tax return once a year. Under the new system, you will need to: 

• Keep digital records of your income and expenses 

• Submit quarterly updates via MTD-compatible software 

• File an end-of-year declaration to finalise your tax position 

When do I need to act? 

HMRC is sending out letters from April 2025, based on 2023-24 tax returns. If you qualify, you will have two options: 

1. Sign up early (from 2025-26) – This allows time to adjust to MTD with support from HMRC. 

1. Wait until April 2026 – You must comply by this date if you meet the income threshold. 

Do I need special software? 

Yes, you will need MTD-compatible software to submit updates. If you are unsure which one suits your needs, we can help you choose. 

What if I cannot use digital tools? 

Exemptions exist for those who are digitally excluded due to age, disability, or lack of access. We can assist with exemption applications. 

How can I prepare? 

Start exploring software options, get familiar with digital record-keeping, and plan ahead for the transition. 

How we can support you 

We make MTD compliance easy by: 

• Helping you select and set up the right software 

• Providing guidance on digital record-keeping 

• Ensuring your quarterly updates and annual declarations go smoothly 

Although MTD does not come into effect until 2026, preparing early will save time, stress, and last-minute panic. If you need help, get in touch today.