There are just a few weeks left now for landlords, sole traders and self-employed works to get ready for Making Tax Digital (MTD) for Income Tax, which comes into effect for many on 6 April.
Already, HMRC has sent out thousands of letters to taxpayers reminding them of their income tax reporting requirements under the new rules.
If you know you are affected by MTD for Income Tax, whether it is this year or in future staging dates, you should act now to ensure you are compliant.
What is Making Tax Digital for Income Tax?
HMRC is trying to move the UK’s tax system into a new digital age, which means that if you are affected, you must:
Just be aware that the new system of quarterly reporting does not mean an end to your annual Self-Assessment reporting. It just means that you will need to submit information to HMRC more regularly throughout the year.
Who is affected by Making Tax Digital for Income Tax?
MTD for Income Tax is being rolled out in stages based on your gross income:
For those in the first phase of MTD for Income Tax, you will need to submit your first quarterly update by 7 August 2026.
You must also keep your digital records accurate from the start of the tax year and file a Final Declaration, similar to the existing Self Assessment tax return, by 31 January 2027.
How can you prepare for MTD for Income Tax?
To begin with, you need to choose and invest in MTD-compatible software or use a suitable bridging solution that allows you to report information in your existing spreadsheets into HMRC’s systems.
You must also sign up for MTD for Income Tax, as HMRC will not automatically do this for you. Once registered, you will be able to begin digital record-keeping.
HMRC is taking a soft launch approach to MTD for Income Tax and is waiving penalties for the first year, but you must still remain compliant and ensure you are registered if you are affected from April this year.
For further advice or support, get in touch today.
