Making Tax Digital for Income Tax is one of the biggest changes to how the self-employed report to HMRC in years. The good news is that, with the right setup, it makes life easier rather than harder. Here is the plain-English version.
What is changing
Today, most sole traders and landlords report their income once a year on a Self Assessment tax return. Under Making Tax Digital for Income Tax, you will instead:
- Keep digital records of your income and expenses.
- Send HMRC a quarterly update from compatible software.
- Submit a final declaration after the year end to confirm everything.
The aim is to spread the admin across the year and reduce errors, rather than cramming it all into one January deadline.
When does it apply to me?
Making Tax Digital for Income Tax is being phased in by income level, and the first phase has now begun:
- From April 2026, it applies if your combined gross income from self-employment and property is over £50,000.
- From April 2027, the threshold drops to £30,000.
- From April 2028, it drops again to £20,000.
The test is your gross income before expenses, not your profit, which catches some people out. Thresholds have moved before, so it is always worth checking your own position rather than relying on a headline.
We keep track of the timetable for every client and tell you well before it applies to you, so you are never caught out.
How to get ready
- Get onto good software. We are a Xero Silver Partner, so we will get you set up on software that is ready for Making Tax Digital and easy to use.
- Keep records flowing. With a tool like Dext, your receipts and bills are captured as you go, so your records stay current.
- Let us handle the filings. We prepare and submit your quarterly updates and your final declaration, so the change is something you barely notice.
Want it handled for you from £62.50 a month? Get your instant quote.