The Government’s Making Tax Digital (MTD) for Income Tax is now only a matter of months away, as the phased introduction of this new tax reporting regime begins in April 2026.
For individuals who complete self-assessment tax returns, the way you record and report your income will change significantly, so it is important that you are prepared and that you understand how the changes could affect you.
When do the new requirements come into effect?
From 6 April 2026, individuals completing Self-Assessment tax returns with an annual turnover or gross income exceeding £50,000 will be required to follow the new MTD for Income Tax legislation.
The threshold will gradually decrease year on year, dropping to £30,000 from April 2027 and £20,000 from 6 April.
Your income tax return from the 2024/25 tax year will determine when the MTD for Income Tax laws apply to you, so if you are likely to be affected from April 2026 and you aren’t prepared yet, we would urge you to seek advice on the steps you need to take to ensure you are compliant.
What will I need to do?
Under the MTD for Income Tax requirements, you will need to ensure that your accounting records are being maintained digitally as paper records will no longer be sufficient.
We strongly advise that, if you have not done so already, you incorporate cloud accounting software into your existing processes to ensure consistency and accuracy across all reporting.
Whilst it will be possible to continue to report your income using spreadsheets by relying on bridging software, HMRC compliant software is recommended.
As well as maintaining digital records, you will need to submit quarterly updates to HM Revenue & Customs (HMRC) and confirm your tax position at the end of the tax year.
The quarterly reports must be submitted via the HMRC App, or through an external agent, such as an accountant, who can file the updates on your behalf.
Act now
If you are not already using MTD-compatible software, choosing the right platform to help you meet your obligations is best done sooner rather than later, so that you can become familiar with how the system works ahead of mandation.
The likes of Xero, QuickBooks and Sage are all HMRC-approved software for the purposes of MTD.
If you are already using software, then you are well on your way to compliance. However you will need to proactively sign up for MTD for ITSA, to be able to submit returns, as this is not automatic.
How can George Hay support you?
We understand that the changes ahead may seem daunting, but we are on hand to advise and guide you, every step of the way. From choosing and implementing the right software, to ensuring timely and accurate reporting, our aim is to simplify the process for you as much as possible.
To discuss the changes coming under MTD for ITSA, and to speak to us about how you can prepare to comply with the requirements, contact our team of professionals.
