What is MTD for Income Tax?
MTD for Income Tax is the new way to report income from self-employment and property to HMRC.
Under MTD for Income Tax you must:
- Keep digital records of income and expenses relating to your sole trade and/or rental business.
- Submit a quarterly summary of your income and expenses from your digital records. A separate quarterly summary is needed for each trade or property business.
- Send a final end-of-year “digital tax return” by 31 January after the tax year ends. This will contain the income and expenses from the filed quarterly updates which will need to be adjusted for accounting and tax purposes. At the same time, you will need to report other (non-MTD) sources of income, such as bank interest, dividends and employment income along with any capital gains and relevant claims for reliefs.
Why have I received a letter from HMRC about Making Tax Digital (MTD) for Income Tax?
If you’ve recently received a letter from HMRC about Making Tax Digital (MTD) for Income Tax, you’re not alone.
HMRC has carried out an assessment based on your 2023/24 income tax self-assessment tax return and identified you as a taxpayer who may need to comply with making tax digital (MTD) from 6 April 2026.
MTD for Income Tax is being phased in for individuals with self-employment and/or property income. Your start date depends on your total sales and rental income.
You will need to sign up for MTD for income tax from 6 April 2026 if the combined turnover from self-employment and rental income on your 2024/25 tax return exceeds £50,000.
What happens if I don’t sign up?
There will likely be penalties for non-compliance.
How can we help you get MTD ready?
We are here to make the switch to Making Tax Digital as smooth and painless as possible.
We can help you;
- Select the right software to stay compliant
- Migrate your records to a user-friendly digital system
- Provide training, guidance and support to ensure a smooth transition
Contact us today to get MTD ready.