HMRC’s Making Tax Digital (MTD) programme continues to reshape the way individuals and businesses manage their tax affairs. While VAT-registered businesses are already onboard, the next few years will see a phased rollout for self-employed individuals and landlords.
If you’re self-employed, here’s what to expect and how to prepare.
Key Dates and Income Thresholds
MTD for Income Tax Self Assessment (ITSA) will be introduced in stages:
- April 2026: MTD becomes mandatory for self-employed individuals and landlords with annual income over £50,000.
- April 2027: The threshold drops to include those earning over £30,000.
- April 2028: It will extend further to include those earning over £20,000 annually.
These thresholds apply to gross income, not profit, and include combined earnings from self-employment and property income.
What Will Be Required
If you fall within these thresholds, you’ll need to:
- Maintain digital records of your income and expenses
- Have a business bank account
- Use MTD-compatible software to manage your finances
- Submit quarterly updates to HMRC
- File a final end-of-year declaration through the software
This replaces the traditional annual Self Assessment return for those within the scope of MTD.
How to Prepare
Now is the time to:
- Assess your income: Determine when MTD will apply to you.
- Choose accounting software: We recommend selecting a trusted MTD-compatible solution now to ensure a smooth transition.
- Seek professional guidance: An accountant can help set up your digital records and ensure you’re fully compliant ahead of the deadlines.
Final Thoughts
MTD aims to reduce errors and improve the efficiency of the tax system—but it also represents a significant shift in how self-employed individuals manage their obligations. Early preparation is key.
At DMC Accounting Ltd, we’re here to support you every step of the way. If you have questions about your MTD obligations or need help choosing software, get in touch today.