Expert article
Making Tax Digital Is Here: What UK Small Businesses Need to Know Now
Making Tax Digital (MTD) for Income Tax is the biggest change to Self Assessment in decades. If you are a sole trader or a landlord, it changes how and when you report your income to HMRC.
Who has to use it, and when?
It is being phased in based on your qualifying income, which is your combined gross income from self-employment and property:
- From 6 April 2026: qualifying income over £50,000 (based on your 2024/25 return)
- From 6 April 2027: qualifying income over £30,000 (based on your 2025/26 return)
- From 6 April 2028: qualifying income over £20,000 (based on your 2026/27 return)
The key word is gross. The test uses your turnover and rent before expenses, not your profit. A landlord with £54,000 of rent and £31,000 of profit is in scope.
What changes?
- Digital records: income and expenses must be kept in MTD-compatible software, not a paper diary or a simple spreadsheet on its own.
- Quarterly updates: a summary of income and expenses is sent to HMRC four times a year. For most people, the quarters run to 5 July, 5 October, 5 January and 5 April, and each update is due about a month later (for example, 7 August for the first quarter).
- Year-end return: you still finalise the year and pay your tax by 31 January.
Is there any leeway in the first year?
HMRC has confirmed it won't issue penalty points for late quarterly updates during the first year (2026/27). That is a soft landing, not an exemption. You still have to keep digital records and file.
How to prepare
- Add up your gross self-employment and property income for the relevant tax year.
- If you are over (or close to) the threshold, choose MTD-compatible software and connect your bank feed.
- Start keeping digital records from the first day of the tax year you join.
- Agree who will submit the quarterly updates: you, or your accountant.
JZ Consultants can register you for MTD, set up the right software and handle your quarterly submissions. Book a free consultation to check whether you are affected.
This article is general guidance, correct at the date of publication. Check GOV.UK or speak to us about your own position.