As we approach April 2026, significant changes are on the horizon for businesses and individuals regarding Making Tax Digital (MTD). If you haven’t yet explored how this affects you, now is the time to prepare for the shift. The UK government has been gradually rolling out MTD over the past few years, with MTD for VAT already mandatory for many businesses. By April 2026, the rules will be extended further to cover income tax for individuals and businesses with income above £50,000.
In this blog, we’ll cover the key points that will affect those impacted by this deadline and offer guidance on how to ensure you are ready.
What is MTD?
Making Tax Digital is a government initiative designed to streamline and modernize the tax system. It requires taxpayers to keep digital records and submit their tax returns online through compatible software. The aim is to reduce errors, make the tax process more efficient, and ensure businesses stay compliant.
Who Will Be Impacted from April 2026?
From April 2026, MTD for Income Tax Self Assessment (ITSA) will apply to:
• Self-employed individuals and landlords with a total income of over £50,000.
• Partnerships with self-employed individuals where the combined turnover exceeds the threshold.
• Businesses and landlords earning below £50,000 but over £30,000 will also be required to comply from April 2027.
This is a significant extension of the current rules, which have mainly focused on VAT. If your business or personal income falls into these categories, you’ll need to start preparing now.
What Does This Mean for You?
If you’re impacted by the changes coming in April 2026, you’ll need to:
1. Keep Digital Records: Paper records will no longer be sufficient. You’ll need to maintain digital records of your income and expenses using MTD-compatible software.
2. Submit Quarterly Updates: Instead of one annual tax return, MTD requires quarterly updates to HMRC. These updates will provide an ongoing picture of your tax position throughout the year, reducing the end-of-year rush.
3. Final Declaration: At the end of the tax year, a final declaration will replace the traditional self-assessment, finalizing your tax position for the year.
Why Prepare Now?
The move to MTD will require adjustments in how you manage your accounts and tax affairs. Many businesses and individuals have found the transition easier when they start preparing early, as it gives time to choose the right software, adjust their record-keeping, and ensure they are comfortable with the new system before the deadline hits.
Steps to Take
1. Review Your Income: Determine if your income is above the £50,000 threshold (or will be in the coming years). If you expect to be impacted, start planning for the changes.
2. Choose MTD-Compatible Software: There are several software providers that can help with digital record-keeping and filing. We can advise you on which platform is best suited to your needs.
3. Keep Records Digitally: If you’re still using paper-based systems or spreadsheets, now is the time to shift to digital. Make sure all your income and expenses are captured in a format that meets MTD requirements.
4. Understand Quarterly Updates: We can guide you through how quarterly submissions will work and help you prepare to report your income and expenses to HMRC on time.
How We Can Help
Transitioning to MTD might seem daunting, but we are here to assist you every step of the way. We can:
• Help you choose and set up the right software for your needs.
• Assist with digitizing your record-keeping system.
• Provide guidance on your quarterly updates and final declaration.
• Ensure you remain compliant with the new rules, avoiding potential penalties.
We recommend starting the preparation process early to avoid any last-minute rush and ensure a smooth transition to MTD.
Final Thoughts
April 2026 may seem far off, but the changes it brings are significant. If you’re a landlord, self-employed, or running a partnership with income above £50,000, now is the time to start preparing for Making Tax Digital. By acting early, you can ensure you’re fully compliant and ready for the new requirements, making your tax affairs more streamlined and accurate.
If you need any further advice or support, please don’t hesitate to get in touch with our team. We’re here to make the transition as smooth as possible for you and your business.
Contact us today to discuss how we can help you with MTD compliance!
