You might have heard the phrase “Making Tax Digital” being mentioned more and more lately.
For some people, it sounds like something complicated and technical that only accountants need to worry about.
For others, it just sounds like another government rule that’s going to create more paperwork.
The reality sits somewhere in the middle.
Here’s a quick way to see if this applies to you:
A simple breakdown of who Making Tax Digital for Income Tax affects and who it doesn’t.
Making Tax Digital for Income Tax, often shortened to MTD for IT, is a change coming from HMRC that will affect many self-employed people and landlords over the next few years. The goal is to move away from one annual tax return and towards keeping digital records and sending smaller updates throughout the year.
The good news is that there’s still time to prepare, and for many businesses the changes will simply mean keeping better records as you go along rather than doing everything in one big rush at the end of the year.
Quick Summary
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Making Tax Digital for Income Tax is an HMRC change affecting many self-employed people and landlords
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It requires digital record keeping instead of paper or last-minute spreadsheets
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You’ll send quarterly updates to HMRC using compatible software
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From April 2026: applies to income over £50,000
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From April 2027: applies to income over £30,000
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There is still a final end-of-year submission
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The threshold is based on income before expenses, not profit
What Is Making Tax Digital?
Making Tax Digital is HMRC’s plan to modernise the tax system. You can read the official guidance on the HMRC website here.
Instead of submitting one Self Assessment tax return once a year with all your figures, businesses will keep digital records and send regular updates to HMRC using compatible software.
You might already be familiar with this if you’re VAT registered. Making Tax Digital for VAT has been in place for a few years.
The same basic concept is now being extended to Income Tax.
Who Will Be Affected?
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Self-employed business owners
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Landlords with rental income
Key Dates to Know
From April 2026
If your total self-employment and/or property income is over £50,000 per year, you’ll need to follow the new system.
From April 2027
It will expand to include people earning over £30,000 per year.
Anyone below those levels will continue using the current Self Assessment system for now.
It’s also important to remember that the threshold is based on income before expenses, not profit.
What Will Actually Change?
The biggest change is how and when information is sent to HMRC.
1 – Keeping Digital Records
Instead of paper records or scattered spreadsheets, income and expenses will need to be recorded digitally.
This usually means using accounting software or apps that are compatible with HMRC’s systems.
The aim is to keep records updated regularly rather than trying to rebuild everything months later.
2 – Sending Quarterly Updates
Rather than reporting everything once a year, you’ll send quarterly summaries of your income and expenses to HMRC.
These updates don’t calculate your final tax bill. They simply give HMRC a picture of how your business is performing during the year.
3 – A Final End-of-Year Submission
At the end of the tax year there will still be a final step to confirm everything.
This replaces the traditional Self Assessment tax return.
What This Means in Practice
For many small business owners, the biggest difference won’t be the reporting itself — it will be how records are kept during the year.
Keeping your numbers updated throughout the year means you can better understand your numbers and see:
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how your business is performing
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how much profit you’re making
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roughly what your tax bill might look like
What Should You Do Now?
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The Key Takeaway
Making Tax Digital for Income Tax might sound like a big change, but for many businesses it simply means keeping records digitally and sharing updates during the year instead of once.
It’s designed to reduce the last-minute rush and help you stay on top of your numbers.