What is MTD for Income Tax?
HMRC is moving forward with its plan to digitise the UK tax system. After successfully implementing Making Tax Digital (MTD) for VAT, it’s now extending MTD to Income Tax Self-Assessment (ITSA). This change will primarily affect sole traders and landlords, requiring them to report income digitally through approved software. While this may sound like a big shift, at Super Financial Limited, we’re fully prepared and ready to help you every step of the way.
Who Will Be Affected and When?
The new rules will be introduced gradually. From April 2026, MTD will apply to anyone earning over £50,000 annually from self-employment and/or property income. Then, from April 2027, the threshold will drop to £30,000. There has been talk of reducing the threshold further in the future, but nothing beyond 2027 has been officially confirmed.
What Will Change?
Under MTD for ITSA, you’ll need to keep digital records and use HMRC-approved software (such as QuickBooks, Xero, Sage, or TaxCalc) to manage and report your income. Instead of submitting one tax return at the end of the year, you’ll now need to send quarterly updates to HMRC with summaries of your income and expenses. These updates are not tax returns and won’t require you to calculate tax at that stage.
Quarterly Reporting Deadlines
You’ll submit your updates every three months. The reporting periods and deadlines are:
- 6 April – 5 July → Due by 5 August
- 6 July – 5 October → Due by 5 November
- 6 October – 5 January → Due by 5 February
- 6 January – 5 April → Due by 5 May
These regular updates are designed to reduce errors, give you a clearer view of your tax position, and improve compliance.
Year-End Submissions
At the end of each tax year, you’ll still need to submit some final information to HMRC. This includes:
- An End of Period Statement (EOPS) for each source of income.
- A Final Declaration, which confirms your total income, expenses, and tax due for the year.
This replaces the traditional Self-Assessment return. The tax payment deadline remains 31 January following the end of the tax year.
What Happens If You Miss a Deadline?
HMRC is introducing a points-based penalty system. For each late submission, you’ll get one point. When you accumulate four points, a £200 penalty will be issued. These points can be resolved if you remain compliant for a set period. This system is designed to encourage consistent compliance. The good news is, at Super Financial Limited, we’ll be monitoring deadlines on your behalf, so you won’t miss a thing.
How We’re Preparing at Super Financial Limited
We’ve already acted ahead of time. We joined the MTD pilot scheme in May 2025 and plan to file our first digital returns in July 2025. Our team is also undergoing training with major software providers like QuickBooks to ensure we’re fully ready to handle all aspects of MTD. Our experience with all the leading platforms gives us a strong edge in supporting our clients through this change.
Can You Join Early?
Yes! If you’d like to join the MTD system voluntarily, you can register early—before it becomes mandatory. To do so, you must be a UK resident, have a National Insurance number, be up to date with tax returns and payments, and use a standard 6 April to 5 April accounting period. Voluntary registration is a great opportunity to get used to the new system and sort out any teething issues early on.
How We Can Help You
We understand that MTD might seem like a lot to take in, but that’s exactly why we’re here. At Super Financial Limited, our priority is to make this transition as simple and stress-free as possible for you. You just need to stay in touch with us and keep your records organised—we’ll take care of the software setup, reporting, and deadlines.
If you’re unsure whether MTD applies to you, or if you want help prepare early, just give us a call or send us a message. We’re here to guide you through the entire process with solid advice, reliable service, and a plan that works for you.
