Making Tax Digital (MTD) for Income Tax is a HMRC initiative to streamline tax reporting and move recording and reporting income and expenses, if you are either self-employed and/or receive property income, towards a fully digital tax system. This means you will be required to maintain digital records, submit quarterly updates digitally, and submit a final declaration that includes any other income as well as the final business profit/loss.
Who is Effected and What is Qualifying Income?
MTD will affect all sole traders and/or landlords. The date you are required to comply with MTD depends upon the level of your qualifying income. When considering thresholds (detailed below), it is income (not profit) that is taken into account. If multiple sources of relevant income are held, such as trading and rental income, then the income sources are combined to determine if you have exceeded the threshold.
Mandation from 6 April 2026 will be based upon the amounts reported on an individual’s self-assessment tax return for the year ending 5 April 2025. MTD will eliminate the need for a self-assessment tax return.
Key Dates and Thresholds
The key dates and thresholds for reporting under MTD are:
- 6 April 2026: For individuals with gross business turnover and/or rental income of more than £50,000.
- 6 April 2027: For individuals with gross business turnover and/or rental income of more that £30,000;
- A date yet to be determined but within this parliamentary session: For individuals with gross business turnover and/or rental income of more that £20,000.
Exemptions from MTD
MTD requirements will not apply to the following:
- Individuals who do not have a UK National Insurance Number.
- Non-UK resident taxpayers in respect of their relevant foreign income i.e. foreign businesses. However, they will need to comply with MTD for their UK self-employment and property income.
- Foster carers.
- Trusts, estates, non-resident companies and trustees of registered pension schemes.
- Those subject to an insolvency procedure.
- Digital exclusions for people where it is not practical for them to use digital tools or electronic communication due to age, disability, religion or any other reason.
Digital Records and Quarterly Submissions
MTD will necessitate that individuals acquire software that is compatible with HMRC’s systems. The software should be used to keep digital records, submit quarterly records of income and expenditure to HMRC, and provide a final declaration. The software used by Dixcart is fully compatible with these requirements. Under MTD, a minimum of four quarterly submissions will be required for each accounting period and for a business that follows the tax year (6 April to 5 April), the quarterly reports for the 2026/27 financial year would need to include at least the following:
- 1st Submission: To cover the period from 6 April 2026 to 5 July 2026 – Due by 7 August 2026.
- 2nd Submission: To cover the period from 6 July 2026 to 5 October 2026 – Due by 7 November 2026.
- 3rd Submission: To cover the period from 6 October 2026 to 5 January 2027 – Due by 7 February 2027.
- 4th Submission: To cover the period from 6 January 2027 to 5 April 2027 – Due 7 May 2027.
How to Prepare?
If you are expected to come under MTD from 6 April 2026, then it is important to assess whether you have suitable digital records in place. This will depend upon how you currently maintain your business or rental records and your first step should be to find a suitable record-keeping solution.
If you have multiple sources of income, you will need to know how to manage the records for each one, as you will need to keep separate digital records and separate submissions for each business. However, you will not be required to use the same system for every source and the right solution could depend upon your own particular circumstances and types of income.
You can start to keep digital records at any time, and we recommend doing so before your MTD start date. This will allow you to become familiar with the record-keeping system that best suits your needs.
How We Can Help?
The above article does not cover all aspects of MTD. Dixcart will be able to help review your position, confirm your mandation date, and discuss how to approach both record-keeping and quarterly reporting requirements before MTD becomes mandatory. If you would like to discuss this in more detail and learn how we can assist you, please contact the Dixcart office in the UK at hello@dixcartuk.com.
