Understanding Making Tax Digital for Income Tax (MTD for IT)

Understanding Making Tax Digital for Income Tax (MTD for IT)

Starting 6 April 2026, Making Tax Digital for Income Tax (MTD for IT) will become mandatory for many self-employed individuals and landlords. This change means you'll need to keep digital records and submit quarterly updates to HMRC using compatible software.

However, there are some exemptions—so not everyone will be required to comply immediately.

Who Needs to Follow the New Rules?

Let’s break down who needs to follow the new rules and who might be exempt from them.

Who Will Need to Use MTD for IT?

MTD for IT will roll out gradually, starting with sole traders and landlords from the 2026/27 tax year.

You’ll be required to use MTD for IT if:

• 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.

  
  

Check what qualifies as income.

Who is EXEMPT from MTD for IT?

You won’t need to sign up for MTD for IT if:

• Your qualifying income is £20,000 or less.

• You meet HMRC's automatic exemption criteria.

• You apply for an exemption and HMRC approves your request.

  
  

When Will You Be Required to Join MTD for IT?

HMRC is phasing in MTD for IT based on income thresholds:

• Over £50,000 → Start from 6 April 2026.

• Over £30,000 → Start from 6 April 2027.

• Over £20,000 → Expected to start from 2028 (pending legislation).

  
  

Business partnerships will be brought into the scheme later, but HMRC has yet to confirm the start date.

How A to Z Finance Solutions Ltd Can Help

Although you’ll begin using MTD for IT from the date your threshold applies, you can also sign up early if you’re ready to go digital.

At A to Z Finance Solutions Ltd, we can help you:

• Understand the MTD for IT rules.

• Choose the right software for digital recordkeeping.

• Set up your accounts to ensure smooth quarterly submissions.

  
  

Preparing for the Transition

Let’s make your transition to digital tax hassle-free.

Getting ready for MTD for IT is essential. Early preparation can save you time and stress.

Get in touch with our team today to ensure you’re ready for MTD for IT—well ahead of time.

Contact us

The Importance of Digital Recordkeeping

Digital recordkeeping is not just a requirement; it’s a significant improvement over traditional methods. It enhances accuracy and efficiency.

Benefits of Going Digital

1. Improved Accuracy: Digital tools reduce human error.

2. Time-Saving: Automated processes save you valuable time.

3. Accessibility: Access your records anytime, anywhere.

   
   

Choosing the Right Software

Selecting the right software is crucial. It should meet your specific needs and comply with HMRC regulations.

Training and Support

We offer training sessions to help you understand how to use the software effectively. Our support team is always available for any questions you may have.

Conclusion

In conclusion, the transition to Making Tax Digital for Income Tax is a significant change for many. Understanding the requirements and preparing in advance can make the process smoother.

Don't hesitate to reach out for assistance. We are here to help you navigate this new landscape confidently.