Making Tax Digital for Income Tax – update 09.03.2026
Making Tax Digital for Income Tax (often shortened to MTD for IT) is the biggest change to the UK tax system in 30 years. While it may sound complicated, the reality is that for most people it simply means keeping digital records and sending updates to HMRC more regularly using either software or spreadsheets via bridging software (yes, that’s right! You can keep using a spreadsheet if you’re able to utilise bridging software)
What is Making Tax Digital for Income Tax?
Making Tax Digital is HMRC’s plan to modernise the tax system and reduce errors in tax reporting and therefore close the Tax gap (£46.8 billion in 2023/24)
For people affected by the rules, it will mean:
- Maintaining digital records of income and expenses
- Using MTD compatible software to submit information to HMRC
- Sending Quarterly Updates (QUs) instead of just submitting one tax return per year
- Completing an end of year final submission to confirm the overall tax position (again, through MTD compliant software which MUST be on the HMRC recognised list)
The goal is to make tax reporting more accurate and give taxpayers a clearer picture of their tax throughout the year
Who will need to follow the new rules?
Making Tax Digital for Income Tax will apply to self-employed individuals and/or landlords whose combined business and property income exceeds the qualifying income thresholds and is being phased in over the next 3 years
Qualifying income thresholds are as follows:
If your income falls within these thresholds, you will need to keep digital records and submit updates through compatible software before submitting your final tax return through MTD software
When are the deadlines?
You have to maintain digital accounting records throughout the year but submit a Quarterly update each quarter, choosing either calendar dates or “standard”. We always use calendar as it’s the easiest for our clients to use but here’s both below:
There are penalties for late filing but in the first year but they are not being issued as part of HMRC’s soft landing. HMRC can still issue you with a £3,000 fine for not maintaining digital accounting records though! So let’s get you on board ASAP
What will you need to do?
Under MTD, most clients will need to:
- Keep digital records of income and expenses
- Use compatible accounting software instead of spreadsheets or paper records alone
- Submit quarterly updates to HMRC
- Complete a final end-of-year declaration
While that might sound like a lot more work, the right software and support can make the process much easier and often quicker than the current system
Partnerships, are they included?
Income from partnerships do not currently count towards qualifying income for the MTD thresholds and there is no obligation to report under MTD but HMRC is expected to consult on this in 2028 to see when or if partnerships fall under MTD.
If you have partnership income AND you have sole trader/ rental income that exceeds the thresholds then you’d be mandated under MTD and will still need to file your QUs for the sole trade and rental income and will need to file your final Tax return using MTD compliant software
Limited Companies, are they included?
No. MTD for Companies was shelved in 2025
Software solutions
We’ve spent a lot of time testing, demoing, talking to software vendors and Tom is now considered one of the leading UK Accountants in the field of MTD and has hosted over 30 software demos himself through his work with Accountants Therapy
Check out the YouTube series below:
Our top 4 solutions
We can offer the following services with our top 4 solutions:
- Initial set up
- Training and bookkeeping guide so you can DIY
- Bookkeeping
- Quarter Update submissions
- Final Tax return
Freeagent: https://www.freeagent.com/
One of the market leading bookkeeping software solutions and if you’re a customer of Natwest, RBS or Mettle, you get it for FREE! This is our no.1 solution for new clients that want to stay on top of their bookkeeping themselves whilst not breaking the bank
DEXT solo: https://dext.com/uk/mtd-it/solo-mtd-software
The future of bookkeeping is here with their AI agent. Absolutely incredible what this is capable of and the pricing is on point!
Taxcalc: https://www.taxcalc.com/mtd
Spreadsheets are sexy and Taxcalc offer a perfect bridging solution to allow Taxpayers to continue using them
Xero: https://www.xero.com/uk/programme/making-tax-digital/
One of the market leaders and with numerous different licence packages we can help you find a solution that works
Using software not listed above but still want to work with us?
Don’t worry, we’ve got you covered. We still have clients using Quickbooks, Sage, Quickfile etc. but if you come to us using a vendor outside our top 4, we’ll still support you but we won’t be able to provide training or dedicated fixes in the software
How JP Blackmoor can help
The good news is that you won’t need to navigate this alone
At JP Blackmoor, we are already preparing our clients for the transition and will support you every step of the way
We can help by:
- Identifying whether MTD applies to you
- Helping you choose the right software
- Setting up digital record-keeping systems
- Reviewing your records and submitting quarterly updates
- Completing your end-of-year tax submission
- Providing ongoing support and advice
Our goal is to ensure you remain fully compliant with HMRC while keeping the process simple and stress-free
Preparing early makes things easier
Although the rules don’t come into force until April 2026, getting organised early can make the transition much smoother
Moving to digital record-keeping now can help you:
- Stay on top of your finances
- Understand your tax position earlier
- Avoid a last-minute rush when the rules begin
Need Help Getting Ready?
If you think Making Tax Digital for Income Tax may apply to you, or you’d like to understand what it means for your business or property income, we’d be happy to help
Please get in touch with the JP Blackmoor team and we can guide you through the next steps
NOTE: the above is a brief outline of MTDfIT and you should still read through the full guidance and speak to a professional for advice
