MTD is changing: Act now to stay ahead of HMRC’s next big shake-up

While the next phase of Making Tax Digital (MTD) does not officially come into force until April 2026, the time to prepare is right now.

If you are a sole trader, self-employed, or a landlord earning over £50,000 per year, you are firmly in HMRC’s sights and delaying action could lead to unnecessary stress, poor preparation, and potential penalties.

Let’s explore what is changing and why you should not wait until the last minute to act.

Back to basics – What is Making Tax Digital?

MTD is the Government’s flagship programme to digitise the UK tax system. It requires:

• Digital record-keeping
• Quarterly submissions using HMRC-approved software
• An End of Period Statement and a final declaration each year

The aim? To reduce errors, improve compliance, and give HMRC more up-to-date visibility of your income.

Who is affected—and when?

The next phase of MTD (known as MTD for Income Tax Self-Assessment or ITSA) starts  from April 2026 for anyone earning over £50,000 from self-employment or property.

This is just the beginning, as:

• From April 2027, the threshold drops to £30,000
• From April 2028, it drops again to £20,000

HMRC will begin notifying affected taxpayers in April 2025, based on your 2023–24 tax return.

Why do you need to act now?

While April 2026 may seem far off, adopting a wait-and-see approach is risky. Here’s why:

• Learning curves take time – Understanding new software and adapting your record-keeping process is not something to leave until the last minute
• Tech takes setup – Choosing and integrating MTD-compatible software into your daily routine is smoother with a proper lead-in
• Mistakes are easier to fix early – Ironing out issues is far less stressful when there’s no deadline breathing down your neck

What action should you take now?

• Check if you are affected – If your income from self-employment and/or property exceeds £50,000, you need to start preparing
• Select the right software – Not all platforms are MTD-compliant. We can help you choose one that suits your business needs
• Explore exemptions – If you or a client may be eligible for an exemption due to age, disability or digital exclusion, start the application process well in advance

How can we support you?

Our expert team at Brown Butler is already helping clients make the shift to digital. We offer:

• A personalised MTD-readiness review
• Support selecting and setting up compatible software
• Guidance on digital record-keeping best practices
• Ongoing support to help with quarterly updates and final submissions

Don’t leave it too late

MTD for ITSA is one of the biggest changes to the UK tax system in decades. And while the deadline is set for 2026, the real window of opportunity is now.

Preparing early reduces stress, gives you more options, and helps you stay compliant from day one.

Talk to us today to start your MTD transition and ensure you are fully ready before the rush begins.