Making Tax Digital for Income Tax

What You Need to Know

The way businesses and landlords report their income to HMRC is changing from 6 April 2026. Under the government’s Making Tax Digital (MTD) programme, Income Tax Self Assessment (ITSA) is being enhanced with a new, fully digital system: Making Tax Digital for Income Tax (MTD for IT).

At Debere, we are fully prepared to support sole traders and landlords through every stage of this transition, from software setup to quarterly submissions and year-end compliance.

What Is Making Tax Digital for Income Tax?

MTD is a government initiative introduced by HM Revenue and Customs (HMRC) to modernise the UK tax system.

Under MTD for Income Tax, affected taxpayers must:

• Keep digital records of income and expenses
• Use HMRC-approved software
• Submit quarterly updates to HMRC
• Complete your annual self-assessment tax return

Who Will Be Affected?

MTD for Income Tax will apply to:

• Self-employed individuals (sole traders)
• Landlords with UK property income

The rules apply once total gross income from self-employment and/or property exceeds the government threshold which is being phased in from April 2026 (see below).

If you currently submit a Self Assessment tax return and earn income from business or property, there is a strong likelihood you will fall within the new requirements.

Exempt Income

The following income does not form part of your quarterly MTD fillings and will be included in your self assessment tax return (if applicable):

• Partnership income
• Interest income
• Dividend income
• Employment income

If you have other income and are unsure whether this falls under the MTD requirements please get in touch and we can advise you on this.

The rollout is currently scheduled as follows:

• From April 2026 – Individuals with qualifying income over £50,000
• From April 2027 – Individuals with qualifying income over £30,000
• From April 2028 – Individuals with qualifying income over £20,000
• Further expansion may follow in later years

What Will Change?

Here is how the process will differ from the current system:

Current System

• Keep records (paper or digital)
• Submit one Self Assessment tax return per year
• Pay tax in January (and possibly July payments on account)

Under MTD for Income Tax

• Maintain digital bookkeeping records
• Submit four quarterly updates
• Submit a  Self Assessment, to account for all other income not under MTD (e.g. employment income)
• Continue to make payments on account where applicable

This means more frequent reporting, but with better visibility of your tax position throughout the year.

What Are the Penalties for Non-Compliance?

MTD introduces a new points-based penalty system for late submissions and late payments. Repeated failures to comply could result in:

• Financial penalties
• Interest charges
• Increased HMRC scrutiny

Ensuring your systems are compliant well before the start date will help you avoid unnecessary risk.

How We Can Help

At Debere, we provide a complete MTD for Income Tax solution, including:

Digital Bookkeeping Setup

We help you move from spreadsheets or paper records to compliant cloud accounting software.
Software Advice & Implementation

We recommend and implement HMRC-recognised software tailored to your business.

Quarterly Reporting

We prepare and submit your quarterly updates accurately and on time, giving advice along the way to ensure there are no surprises.

The filing dates and deadlines are as follows:

6th April 26 – 5th July 26 – first quarterly MTD submission due by 7th August 26

6th July 26 – 5th October 26 – second quarterly MTD submission due by 7th November 26

6th October 26 –  5th January 27 – third quarterly MTD submission due by 7th February 27

6th January 27 – 5th April 27 - fourth quarterly MTD submission due by 7th May 27

Final Declaration & Year-End Compliance

We handle the final submission process and ensure your tax affairs remain fully compliant 

Speak to one of our team

MTD Income Tax represents one of the biggest changes to personal tax reporting in recent years. At Debere we have already been working with our clients to make the transition to MTD. With the right professional support, it can be a smooth and stress-free process.

With the imminent changes and new tax year rapidly approaching, if you are a sole trader or landlord and would like tailored advice on how MTD will affect you, please act now and contact us!

We are here to ensure you remain compliant, efficient, and fully prepared for the future of digital tax reporting.