Making Tax Digital for Income Tax

Starting April 2026, Making Tax Digital (MTD) for Income Tax (IT) will change how self-employed individuals and landlords report their earnings to HMRC.

Who Does This Affect?

MTD for ITSA applies to:
✔️ Sole traders and landlords earning over £50,000 per year (from April 2026).
✔️ Those earning between £30,000 and £50,000 will need to comply from April 2027.
✔️ Anyone who currently submits a Self Assessment tax return for business or property income.

Who Is NOT Affected?

❌ Individuals earning below £30,000 (future plans pending).
❌ Partnerships (expected to be included later).
❌ Those who only receive income through PAYE (e.g., employees, pensioners).

What Changes Under MTD?

Quarterly updates: Instead of an annual Self Assessment, you’ll send income and expense updates every three months.
Digital records: You’ll need to use HMRC-approved software to keep track of your income and expenses.
End-of-year declaration: At the end of the tax year, you’ll confirm final figures and submit a final declaration instead of a Self Assessment tax return.

Why Is This Happening?

MTD aims to make tax reporting easier, more efficient, and less prone to errors.

Need Help Preparing for MTD?

At LMO Bookkeeping Limited, we’re here to help you navigate these changes smoothly.

Get in touch with Linda Owen for expert advice on:
Setting up HMRC-approved software - FreeAgent & Xero are perfect for this!
Understanding your quarterly reporting obligations
Ensuring compliance with MTD for ITSA

💬 Contact Linda today for a free consultation!