HMRC continues to send updates for Making Tax Digital

HMRC continues to send updates for Making Tax Digital

With just seven months to go until more than 800,000 landlords and self-employed workers will have to start to file quarterly updates with HMRC for Making Tax Digital (MTD) for Income Tax, The Director of MTD at HMRC, has explained what will happen.

Therefore, if you’re a self-employed worker, MTD for Income Tax is a major change that will build on the digital tools you likely already use. It’s the biggest transformation since self-assessment launched in 1997.

What’s changing (a recap!)

From April 2026, if your turnover is above £50,000 from self-employment and property income combined, you will need to use MTD-compatible software to keep digital records for sending HMRC quarterly updates and your tax returns.

Those with turnover above £30,000 will follow from April 2027 and with turnover above £20,000, in April 2028.

Quarterly updates are not tax returns – they are simple, unadjusted summaries of income and expenditure that software generates automatically.

Therefore, as it becomes your turn to do MTD updates, instead of cramming everything into January for the self-assessment deadline, you will be spreading the work across the year. If you make any errors in a quarterly update, you can make corrections in the next update.

Affected taxpayers will still submit a traditional self-assessment tax return for the previous tax year during the first year on MTD, but after that, everything can be handled through software.

This will mean that instead of spending January hunting for receipts to meet the self-assessment deadline. MTD for Income Tax will reduce this stress and extends what two million businesses already do successfully for VAT quarterly returns.

There are also a number of benefits for working this way.

• Real-time tax visibility: Your software will estimate your tax as you go, helping you plan and budget better.
• Simplified record keeping: Some software allows you to photograph receipts, log income as it comes in, and track expenses on the go – no more shoeboxes full of receipts or never-ending email searches.
• Automation: Many of the software options categorise expenses, tally invoices, and flag potential errors, making it easier to get your tax right the first time.

For those in professional services, it could mean better tracking of client fees and business expenses throughout the year.

HMRC has launched a dedicated MTD campaign page on gov.uk to provide detailed advice about MTD for Income Tax for affected taxpayers, with information about filing deadlines and eligibility criteria.