Making Tax Digital: What You Need to Know
Making Tax Digital (MTD) is transforming the way businesses and individuals manage their taxes. At CRASL, we’re here to help you stay compliant and make the transition as smooth as possible with the right tools, advice, and ongoing support.
Making Tax Digital
Making Tax Digital (MTD) is HMRC’s plan to bring the UK tax system fully into the digital age. Under the scheme, businesses and individuals must keep their records in a digital format and send tax information to HMRC online. The idea is to make reporting more accurate, more efficient, and easier to stay on top of.
At present, MTD applies to VAT registered businesses, but it is being rolled out further in stages. From April 2026, self-employed people and landlords with income over £50,000 will be included. The threshold will then reduce to £30,000 in April 2027, and £20,000 in April 2028. This means the traditional Self Assessment will be replaced by more frequent digital updates submitted through MTD-compatible software, giving taxpayers greater clarity while cutting down on mistakes.
The rollout will happen in stages
From 6 April 2026, if your annual business or property income is above £50,000
From April 2027, if your turnover is above £30,000
From April 2028, if your turnover is above £20,000
Making Tax Digital for Income Tax
Making Tax Digital for Income Tax (sometimes referred to as MTD for ITSA) will significantly change the way self-employed individuals and landlords report their income to HMRC. The Spring Budget confirmed that from April 2028, anyone with turnover above £20,000 will be brought into the scheme.
Importantly, when MTD begins in 2026, HMRC will look back at figures in the 2024/25 tax year (due for submission by 31 January 2026) to decide who meets the £50,000 threshold.
If you fall within these criteria, you will be required to:
- Keep digital records of your business and property income and expenses
- Send HMRC quarterly updates for each source of income (self-employment or property)
- Complete a final declaration at the end of the tax year to confirm your overall position
Making Tax Digital for Income Tax – Your Questions Answered
The Government is changing the way millions of people report their income to HMRC. The new system is called Making Tax Digital for Income Tax (also known as MTD for ITSA). Here’s what you need to know.
What is MTD for Income Tax?
It is HMRC’s plan to move away from the traditional annual Self Assessment tax return. Instead, you will need to keep digital records and send HMRC quarterly updates of your income and expenses using approved software. At the end of each tax year, you’ll confirm your overall position with a final declaration.
Who does it apply to?
- From 6 April 2026 – self-employed people and landlords with annual income over £50,000
- From April 2027 – those with income over £30,000
- From April 2028 – those with income over £20,000
How will HMRC decide if I need to join?
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When MTD starts in April 2026, HMRC will use the figures from your 2024/25 tax return (due by 31 January 2026) to decide if you’re included.
What will I need to do?
- Keep your business and property records digitally
- Send quarterly updates of income and expenses for each business or property source
- Submit a final declaration at the end of the tax year
Do I need special software?
Yes. You’ll need to use MTD-compatible software (such as Xero, QuickBooks, or FreeAgent) to keep records and send updates to HMRC. If you’re not already using digital accounting software, now is a good time to start exploring your options.
What if I have more than one business?
If you are self-employed with more than one business, or you are both self-employed and a landlord, you’ll need to keep separate digital records and submit updates for each income source.
Will this make tax more complicated?
MTD means reporting to HMRC more often, but the right software can make the process quicker and reduce the risk of errors. It also gives you a clearer, up-to-date picture of your income throughout the year rather than waiting until year-end.
How can CRASL help?
We can:
- Review whether you fall into MTD and when it will affect you
- Set up and train you on suitable accounting software
- Support you with bookkeeping, quarterly updates, and your final declaration
- Make the transition smooth, stress-free, and fully compliant
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