Home → Services → Making Tax Digital
MAKING TAX DIGITAL · MTD FOR INCOME TAX
Making Tax Digital for Income Tax - now live. Are you compliant?
MTD for Income Tax started on 6 April 2026 for self-employed people and landlords with income over £50,000. Quarterly digital submissions to HMRC now replace the annual self-assessment return. If you're not already set up, you need to act now.
Live now
£50,000+ income from 6 April 2026
April 2027
£30,000+ income
April 2028
£20,000+ income
WHAT IS MTD
What is Making Tax Digital for Income Tax?
Making Tax Digital (MTD) for Income Tax requires self-employed people and landlords to keep digital records and submit quarterly updates to HMRC - replacing the annual self-assessment return. Records must be kept in HMRC-approved software and four quarterly submissions made per year, plus a final year-end declaration.
Key requirements
· 4 quarterly submissions per year
· Digital records — no paper-only records
· HMRC-approved software required
· Final declaration by 31 January each year
· Replaces annual self-assessment for those in scope
Quarterly deadlines
· Quarter 1 → due 7 August
· Quarter 2 → due 7 November
· Quarter 3 → due 7 February
· Quarter 4 → due 7 May
· Final declaration → 31 January
DOES IT AFFECT ME
Who does Making Tax Digital apply to?
MTD for Income Tax applies to self-employed people and landlords. The threshold is based on gross qualifying income - your total income from self-employment and property before expenses, not your profit. If your combined income from both sources exceeds the threshold, MTD applies.
Note: Income means gross qualifying income from self-employment and/or property - before expenses, not profit. If you earn £35,000 from self-employment and £20,000 from rental income, your combined £55,000 puts you in the April 2026 group.
WHAT CHANGES
Self-assessment vs Making Tax Digital
MTD represents the biggest change to UK tax administration since self-assessment launched in 1997. Here is what changes for those in scope.
Before MTD — self-assessment
· One annual tax return by 31 January
· Paper or digital records both acceptable
· File everything at year-end in one go
· One deadline per year
· No software requirement
Under MTD — new rules
· 4 quarterly updates per year
· Digital records only — mandatory
· HMRC-approved software required
· Final declaration by 31 January
· Quarterly deadlines throughout the year
THE SOFTWARE QUESTION
What software do you need for Making Tax Digital?
You must use HMRC-approved MTD-compatible software to keep your records and submit your quarterly updates. Spreadsheets alone are not MTD-compliant - though bridging software can link them to a compatible submission tool. The main HMRC-approved options are Xero, QuickBooks and FreeAgent. We set clients up on the right software as part of the engagement and handle all submissions on your behalf.
Xero
Full MTD-compatible accounting software. Ideal for businesses with employees, VAT and multiple income streams.
QuickBooks
MTD-compatible with strong reporting features. Good for sole traders and small businesses.
FreeAgent
MTD-compatible and particularly well suited to freelancers, contractors and sole traders.
WORTH CONSIDERING
Could restructuring make tax work harder for you?
For some sole traders and landlords, the move to MTD is a good moment to review whether their current structure is the most tax-efficient. Incorporating as a limited company, for example, takes you outside MTD for Income Tax scope entirely - and could reduce your overall tax bill in the process. If you own both a business and property, the interaction between the two can also be restructured to make the most of available reliefs.
Virtual Finance Office →
MTD compliance handled as standard - digital records, quarterly submissions and software setup all included in your monthly engagement.
Tax advice & strategy →
Could incorporating or restructuring change your MTD obligations and reduce your tax bill? We'll run the numbers and give you a clear recommendation.
HOW WE HELP
What Heights does for MTD clients
We handle everything - from confirming whether MTD applies to you, to setting up your software and submitting every quarterly update on your behalf. You don't need to think about deadlines, software or HMRC - we take care of it all.
✓ Confirm if & when MTD applies to you
✓ Set you up on the right HMRC-approved software
✓ Maintain MTD-compliant digital records
✓ Handle all four quarterly submissions
✓ Submit your final year-end declaration
✓ Keep you ahead of deadline changes
✓ Review your structure if MTD changes your position
✓ Liaise with HMRC on your behalf
COMMON QUESTIONS
Making Tax Digital - your questions answered
What is Making Tax Digital for Income Tax?
Making Tax Digital (MTD) for Income Tax requires self-employed people and landlords to keep digital records and submit quarterly updates to HMRC - replacing the annual self-assessment return. It applies from 6 April 2026 for those with gross income over £50,000, from April 2027 for those over £30,000, and from April 2028 for those over £20,000.
Do I need to file quarterly under Making Tax Digital?
Yes - if you are in scope, you must submit four quarterly updates per year showing your income and expenses, plus a final declaration by 31 January. The quarterly deadlines are 7 August, 7 November, 7 February and 7 May. These are not four separate tax returns - they are running totals submitted digitally via your MTD-compatible software.
What software do I need for Making Tax Digital?
You must use HMRC-approved MTD-compatible software such as Xero, QuickBooks or FreeAgent. Spreadsheets alone are not compliant - though bridging software can link them to a compatible submission tool. We set clients up on the right software and handle all submissions as part of the engagement.
Does Making Tax Digital apply to limited companies?
No - MTD for Income Tax applies to sole traders and landlords only. Limited companies are not currently in scope. MTD for Corporation Tax has been discussed but no mandatory start date has been confirmed. If you are considering incorporating your business or property portfolio, this is worth factoring into the decision.
What happens if I miss an MTD quarterly deadline?
A points-based penalty system applies - accumulate enough points and a £200 financial penalty is triggered. However, HMRC has confirmed a soft landing for the 2026/27 tax year, meaning no penalty points will be issued for late quarterly updates during the first year for the April 2026 cohort. This grace period does not remove the obligation to submit - it simply means penalties will not apply in year one.
Can my accountant submit MTD returns on my behalf?
Yes - we handle all quarterly submissions and the final declaration on your behalf as your registered agent. You do not need to interact with HMRC directly or log into any software yourself. We maintain your digital records, submit each quarter and keep you informed of your position throughout the year.
Could restructuring my business change my MTD obligations?
Yes - incorporating as a limited company takes you outside MTD for Income Tax scope entirely, since the rules currently apply to sole traders and landlords only. For some people, the move to MTD is a good moment to review whether incorporation or restructuring would reduce their overall tax bill as well as simplify their obligations. We can run the numbers and give you a clear recommendation →
GET MTD-READY
MTD is live. Don't leave it to chance.
Pay less tax. Make more money. Free up more time.
Book a free 20-minute call. We'll confirm whether MTD applies to you, get you set up on the right software and handle your quarterly submissions - so you never have to think about it again.
Free · No obligation · Cancel any time
CLARITY · CONFIDENCE · CONTROL
Chartered accountants, tax advisors and strategists for UK SMEs and property investors. Based at Halton Mill, Lancaster.
Resources
Get In Touch