If you have noticed more TV and online adverts for cloud accounting software lately, that is no accident as the countdown to Making Tax Digital for Income Tax (MTD for IT) ramps up.
There is just two months left for taxpayers in the first phase of MTD for IT to prepare for this landmark change to taxation.
HM Revenue and Customs is currently sending a second wave of letters to landlords, sole traders and self-employed individuals with income over £50,000.
This letter will confirm:
- An overview of MTD for IT and how it works
- The point at which Self Assessment taxpayers must begin using MTD
- A breakdown of the new reporting rules
- The key differences between the current system and how records and reports will be handled under MTD for IT
Nearly one million people are expected to receive a letter explaining they will be mandated into MTD for IT from six April 2026.
Crucially, these letters are going to individuals, not their accountants, so if you receive one and you aren’t yet ready, now is the time to get in touch.
What is changing under Making Tax Digital for Income Tax?
From 6 April, those over the £50,000 threshold must keep digital records and submit quarterly updates to HMRC using MTD compatible software.
Although the first quarterly deadline will be 7 August 2026, those affected will be expected to record their tax affairs digitally from April.
MTD for IT does not replace the existing Self Assessment tax return process but instead require more regular reporting every three months along with an annual return.
Those joining in 2026 must also file as normal by 31 January 2027 for the current 2025/2026 tax year. This means extra reporting, not less.
After this initial phase in 2026, the MTD for IT reporting threshold drops to those with gross income of £30,000 in April 2027 and to £20,000 in April 2028. This will pull many more landlords and small businesses into quarterly reporting.
Software providers are heavily promoting MTD solutions and banks are involved too. However, having software is only part of the picture. The real shift is in how and when you keep your records.
When should I prepare for Making Tax Digital for Income Tax?
Preparing now means time to choose the right system, understand the process and build good habits.
Leaving it late increases the risk of errors, missed deadlines and penalties.
If your income is near £50,000, or likely to reach it, this is the moment to act. The countdown is nearing completion. If you aren’t yet ready, please get in touch with us.