Making Tax Digital for Income Tax (MTD for ITSA) is no longer something on the horizon — it's here. From 6 April 2026, thousands of sole traders and landlords across the UK, including many of our clients here in Macclesfield, Bollington and Cheshire, have entered a new era of digital tax reporting.

If you've heard the term but aren't sure what it actually means for you day to day, this guide will walk you through everything clearly and without jargon.

What is Making Tax Digital?

Making Tax Digital is HMRC's programme to move the UK tax system away from paper-based annual returns and towards real-time, digital record-keeping and reporting. The idea is that rather than scrambling to file one self-assessment tax return each January, you maintain digital records throughout the year and submit quarterly updates to HMRC via approved software.

MTD for VAT has been in place since 2019 for most businesses. MTD for Income Tax — the part that affects self-employed people and landlords — has now begun its phased rollout from April 2026.

Are you affected?

Whether you're caught by MTD from April 2026 depends on your income in the 2024/25 tax year. HMRC uses your most recently filed self-assessment return to determine your status.

April 2026 Live now

Income over £50,000

Sole traders and landlords whose qualifying income from self-employment or property exceeded £50,000 in 2024/25 must now use MTD-compatible software and submit quarterly updates.

April 2027 Upcoming

Income over £30,000

The requirement extends to those with qualifying income above £30,000 in 2025/26.

April 2028 Upcoming

Income over £20,000

A third wave brings in those with qualifying income above £20,000, significantly widening the scope.

Important note on qualifying income

Qualifying income means your gross turnover from self-employment or UK property — before expenses, before any allowances, and before the trading or property allowance. Employment income, dividends, savings interest and pension income do not count towards the threshold.

If you have both a sole trade and a rental property, the gross income from both is combined when measuring against the threshold.

What actually changes?

For those caught by MTD, the annual self-assessment tax return is replaced by a new system of quarterly updates plus a Final Declaration. Here's how it works in practice:

1. Digital record-keeping

You must keep digital records of all your income and expenses using MTD-compatible software. This means no more shoeboxes of receipts — everything needs to be logged digitally throughout the year. Software like Xero, QuickBooks or FreeAgent all support MTD and make this straightforward.

2. Quarterly updates

Every three months you must submit a summary of your income and expenses to HMRC through your software. These are not tax returns — they don't finalise your tax liability — they are progress reports that keep HMRC up to date with your figures throughout the year.

The quarterly deadlines are:

If you have more than one income source — for example, a sole trade and a rental property — you must submit a separate quarterly update for each, meaning eight submissions per year rather than four.

3. Final Declaration

After your fourth quarterly update, you submit a Final Declaration by 31 January following the end of the tax year. This is where you confirm your total income, claim any reliefs or allowances, and finalise your tax liability. For the 2026/27 tax year, the Final Declaration deadline is 31 January 2028.

Soft landing for 2026/27

HMRC has confirmed that no penalty points will be issued for late quarterly updates during the first year (2026/27). This gives you time to adjust to the new system without the risk of financial penalties for missed quarterly deadlines. However, late payment penalties and interest on overdue tax still apply.

Which software do you need?

You must use HMRC-recognised MTD-compatible software. The good news is that the main platforms are all well-established and straightforward to use:

As a Xero Silver Partner, we can set up and configure Xero for you, migrate your existing records, and ensure your quarterly submissions are filed correctly and on time.

Are there any exemptions?

Yes. Some taxpayers are exempt from MTD, either automatically or by application. Automatic exemptions include those who are digitally excluded (for example, due to age, disability or remote location), and certain categories of taxpayers with complex affairs. HMRC has recently updated its exemption guidance following feedback from professional bodies including ICAEW.

If you believe you may qualify for an exemption, it's important to apply to HMRC proactively. We can handle this on your behalf.

What should you do now?

If your income is above £50,000 and you haven't taken action yet, the time to act is now. Here's a simple checklist:

If your income is between £20,000 and £50,000, you have more time but it's still worth getting set up now. The transition is smoother when it's planned rather than rushed.

Not sure if MTD applies to you?

We're helping clients across Macclesfield, Bollington and Cheshire get MTD-ready. Whether you need to sign up now or just want to understand what's coming, we're happy to talk it through — no obligation.

Book a free 30-minute call →

How JAC Accountancy Solutions can help

As your local accountants in Bollington and Macclesfield, we're already working with clients to make the MTD transition as smooth as possible. Our MTD service includes:

Our fees are fixed and agreed upfront — you'll always know what you're paying, with no hourly billing surprises.

This article is for general guidance only and does not constitute professional tax advice. Tax rules can change and individual circumstances vary. Please contact us to discuss your specific situation. JAC Accountancy Solutions Limited is regulated by ICAEW (Membership No. 8650147).