Making Tax Digital
Making Tax Digital (MTD)
What is making Tax Digital?
MTD – Making Tax Digital is part of the HMRCs new digital transformation that aims to make it easier for individuals, businesses and all organisations to ensure their tax affairs are in order.
The main motivation behind MTD is HMRC's belief that a significant portion of the tax gap—the difference between the tax owed and the tax actually paid—is caused by taxpayer errors, with poor record-keeping being a major contributing factor.
As a result, MTD will require businesses, other organisations, and individuals to maintain their records in digital form, either through bookkeeping or accounting software, or at a minimum, using spreadsheets. HMRC believes this approach will help reduce errors and, in turn, narrow the tax gap.
MTD for VAT has been in operation since 2019, with everyone who is VAT registered being required to do quarterly submissions through software such as Xero. HMRC is introducing a new way for self-employed individuals and landlords to report their taxes.
What do you need to know?
Starting from 6th April 2026, Making Tax Digital for Income Tax Self-Assessment will apply to self-employed individuals and landlords with relevant income exceeding £50,000.
What does this change mean?
Under MTD, the traditional annual Self-Assessment tax return will be replaced with quarterly updates and a digital end-of-year submission.
You will need to:
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Who is affected and what date from?
This change will affect self-employed individuals and landlords whose annual income exceeds certain thresholds:
From 6th April 2026
All self-employed individuals and landlords with total relevant income exceeding £50,000.
From 6th April 2027
All self-employed individuals and landlords with total relevant income over £30,000.
From 6th April 2028
All self-employed individuals and landlords with total relevant income exceeding £20,000.
What qualifies as relevant income?
Relevant income refers to your total gross income from self-employment and/or property rental before deducting any expenses.
For example, if you earn £50,000 or more in rental income—even if you have a mortgage and expenses amounting to £40,000—you will still need to comply.
What about other sources of income?
If you have additional income such as a PAYE salary, dividends, pensions, or investment income, this must be declared and included in your final submission at the end of the tax year.
How can you prepare for MTD for Income Tax?
Although April 2026 may feel far away, it’s important to start preparing now. You should consider whether you will:
Complete the quarterly returns yourself using digital accounting software like Xero or landlord-specific software such as Hammock,
OR
Have us, as your professional advisers, handle the quarterly returns on your behalf.
Why You Shouldn’t Wait
Although the changes may seem a way off, there are many benefits to starting early—most importantly, peace of mind.
These benefits include:
We Are Here to Help
We understand that the introduction of Making Tax Digital for income tax can feel overwhelming and add to your administrative burden. As your professional advisers, we’re here to support you every step of the way.
Leading up to the rollout, we’ll keep you updated on any changes and developments, as well as provide details about the services we offer.
In the meantime, if you have any questions or concerns, please reach out to us here at AccuCloud.
- Ready to Take Control?
Let’s talk about how AccuCloud can transform your finance function
Book a FREE New Enquiry Meeting
or call 028 9621 2344
or 048 9621 2344 from Ireland