Making Tax Digital (MTD) is coming to Income Tax Self-Assessment next year. The new HMRC legislation has seen many delays and changes since it was first announced in 2015, but has been a resounding success since the rollout for VAT in April 2019.

What do you need to do?

From April 2026, you need to report your income quarterly if your gross annual self-employment and property income exceeds £50,000, combined from both sources.

This threshold will be lowered to £30,000 from April 2027. It will be lowered further to £20,000 from April 2028.

This means you will need to submit four smaller, cumulative tax updates each year, for the quarters ending 5th July, 5th October, 5th January, and 5th April. The deadlines for each quarter will be one month from the quarter end.

Businesses can elect to report calendar quarters, e.g., 30th June rather than 5th July.

A final tax return, largely similar to the current self-assessment tax return, will follow the fourth and final quarter, and comes pre-populated with the records you submitted throughout the tax year.

There will be no changes to the tax payment dates.

The new system also requires you to hold digital records and use specialised software designed to meet the MTD requirements. This might sound like a lot of work, but the software can generate reports at the click of a button. It all comes together to make your tax reporting faster and easier.

Less stress, fewer inaccuracies, and a much more pleasant HMRC experience.

What can you do to prepare?

We recommend keeping your records digitally, if you don’t already – even a spreadsheet is enough! Taking time to get accustomed to digital records will help make your transition as smooth as possible when MTD comes into force.

MTD will continue to expand as part of HMRC’s digitalisation drive. We expect to see announcements extending the threshold to more self-assessment taxpayers, and the introduction of Making Tax Digital for Partnerships in future.

We have been busy preparing for the changes, so if you have any questions on what Making Tax Digital for Income Tax means for you, or simply need some help with the new quarterly reports, please email us (info@shawgibbs.com) or give us a call on 01865 292 200.