Making Tax Digital (MTD): What You Need to Know
Updated: Oct 22
Reviewed and updated: 22 October 2026. We have updated the original article for the current rollout and annual return process.
Making Tax Digital (MTD) is changing how eligible sole traders and landlords report within Self Assessment. The first phase began in April 2026. Check whether you need to join, rather than waiting until your annual return is due.
Here’s what you need to know about MTD.
🔍 What Is MTD for Income Tax?
MTD for Income Tax requires eligible individuals to keep digital records, send quarterly updates and submit an annual tax return through compatible software. Quarterly updates are summaries, not separate tax returns.
A consistent record-keeping routine can make the process more manageable. Software needs to be set up correctly and the figures still need checking.
🗓️ When Does It Start?
Changes to MTD will roll out in phases:
From 6 April 2026: qualifying income over £50,000 in 2024/25.
From 6 April 2027: qualifying income over £30,000 in 2025/26.
From 6 April 2028: qualifying income over £20,000 in 2026/27. Qualifying income generally combines gross self-employment and property income before expenses. Check HMRC's guidance, including exemptions.
💼 What Will You Need to Do?
Compliance with MTD for ITSA will involve several steps:
Keep digital records of all income and expenses.
Submit quarterly updates to HMRC using MTD-compatible software, such as Xero.
Submit your annual tax return using compatible software after making the necessary year-end adjustments. There is no separate End of Period Statement requirement under the current process.
Keep records up to date throughout the year and agree with your accountant who will prepare, check and submit each update and your annual return.
🤔 How Does This Affect You?
If you are used to filing your tax return once a year, this change might seem daunting. However, with the right software and support, transitioning to MTD can actually save you time. It can also reduce mistakes and give you a clearer picture of your finances throughout the year.
At LMH Accounts Ltd, we are prepared to assist clients with MTD-ready systems. We offer platforms such as Xero, Hubdoc, and Datamolino, which can greatly alleviate the stress of digital transition.
Why Choose LMH Accounts?
Choosing a reliable accounting partner is essential during this shift. We understand the challenges that MTD brings. Our team is experienced and knowledgeable, ready to guide you through each step.
Choosing the Right Software: Not all software is created equal. We help you select a solution that fits your needs.
Maintaining Accurate Records: Our services ensure that your records are thorough, reducing the risk of errors.
Complying with HMRC: Stay compliant and avoid penalties with our timely updates.
Understanding Your Finances: We empower you to make informed decisions based on current data.
📞 Let’s make tax easier. Contact LMH Accounts Ltd today to start preparing for MTD for Income Tax. Don’t let the change catch you off guard.
📧 Email: leanne@lmhaccounts.co.uk
📞 Call: 07429 179767
In conclusion, MTD presents an opportunity to streamline how you handle taxes. By embracing these changes, you enhance your financial management while ensuring compliance. Don’t wait until the last minute!
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