Making Tax Digital for Income Tax

Making Tax Digital for Income Tax is a new way for sole traders and landlords to report their income and expenses to HM Revenue & Customs (HMRC). It means keeping digital records and sending updates during the year, rather than doing everything in one go at the end.

Who needs to use Making Tax Digital for Income Tax?

You’ll need to use Making Tax Digital for Income Tax if all of the following apply:

• You’re a sole trader or landlord registered for Self Assessment

• You earn income from self-employment, property, or both

• Your qualifying income is over £20,000

There are different start dates depending on your income – see below.

When you’ll need to start?

When you need to start using Making Tax Digital for Income Tax depends on your qualifying income in a tax year:

Over £50,000 (based on your 2024–25 tax return)
→ You’ll need to start from 6 April 2026

Over £30,000 (based on your 2025–26 tax return)
→ You’ll need to start from 6 April 2027

Over £20,000 (based on your 2026–27 tax return)
→ The government has confirmed plans to lower the threshold, with legislation to follow

Business partnerships will also need to use Making Tax Digital for Income Tax in the future. HMRC will confirm the timeline for this at a later date.

When you actually need to sign up?

You don’t need to use Making Tax Digital for Income Tax until after you’ve submitted your first Self Assessment tax return.

HMRC will review your return each year and check your qualifying income.

If your income is over the relevant threshold, HMRC will write to you to confirm that you need to start using Making Tax Digital for Income Tax from the start of the next tax year.

For example, if your 2024–25 tax return shows qualifying income over £50,000, HMRC will contact you to confirm that you need to start from 6 April 2026.

If you don’t receive a letter, it’s still your responsibility to check whether Making Tax Digital applies to you and to be ready when you need to join.

Getting ready (without the stress)

Before you start using Making Tax Digital for Income Tax, you’ll need to:

• Choose and set up MTD-compatible software, or

• Decide how your agent will act for you (that can be me)

This doesn’t need to be rushed or overwhelming — getting set up early makes things much easier.

I support sole traders and landlords by:

• Checking if and when Making Tax Digital applies to you

• Making sure you’re set up with the right software

• Acting as your agent if you’d like

• Keeping everything compliant and on track

• Explaining it all in plain English

What qualifying income means?

Your qualifying income is the total income you earn in a tax year from:

• Self-employment

• Property (rental income)

This can come from more than one business or property.

It does not include income from things like employment, dividends or pensions.

If you’re unsure what counts (or what your income was), I can check this for you.

How I can Help?

If you’d like help with Making Tax Digital for Income Tax, or you just want to understand what it means for you, please get in touch for a friendly, no-pressure chat.