You have probably seen the advertising and LinkedIn posts about being ready for MTD for IT from 6 April – but what is it all about and does it affect you?

To give it its full name, Making Tax Digital for Income Tax is a requirement for sole traders and landlords with an income (not profit) of over £50,000 per year.  Is that you?

Making Tax Digital for Income Tax will affect sole traders and landlords with an income (not profit) of over £50,000 per year from 6 April 2026.   People who fall into MTD for IT will need to use recognised accounting software and send quarterly returns to HMRC.

HMRC have reported that only 20% of mandated people have so far registered so it is important to take action if you are obliged to register.

What are the requirements of MTD for IT?

HMRC will need to see evidence of accurate and regular bookkeeping:

• Digital records of your income and expenses relating to your self-employment and rental property (both UK and overseas) will need to be maintained
• Returns are to be sent digitally to HMRC every quarter for each source of income (ie self-employment and rental property, UK and overseas separately)
• Your annual Tax Return still needs to be submitted by 31 January the following year

Who will it affect?

You will need to use Making Tax Digital for Income Tax if you receive:

• Self-employed income
• UK rental income
• Overseas rental income

The threshold for MTD (£50,000 for April 2026) is calculated by combining the income, not the profit, from all of these income sources rather than considering each source individually.   It is based on the figures reported to HMRC in your 5 April 2025 tax return.

I have more than one income stream – do I need to keep separate records?

Yes – you need to maintain separate records for each business and make separate quarterly submissions for each of them.   For example, if you are an electrician and a driving instructor, you will need to maintain separate records for each business and make separate submissions for each.

Income from various UK properties can be combined into one account, but income from overseas property must be accounted for in a separate account and reported separately to HMRC.

If you are a landlord with jointly owned property, you will be allowed simpler bookkeeping.

What do I have to do?

• If you are in scope, you should register with HMRC for MTD for IT as soon as possible.
• You need to decide how to manage your digital record keeping and start to do this as soon as possible so that your records are up to date.
• The first quarter runs from 6 Apil 2026 to 5 July with the deadline for the quarterly submission on 7 August although you can choose to prepare returns to calendar month ends.

Do I still need to complete and file my tax return?

Yes.  Your annual self-assessment tax return will still need to be submitted and tax paid by 31 January.   HMRC will provide you with a summary of all of your submissions which you may want to use as a base for your annual tax return.  Most people will need to make adjustments to include any other income sources, year-end accounting adjustments and any allowances that may need to be incorporated.

Any queries?

For those without an accountant,  HMRC provide detailed guidance including recommendations for accounting software Making Tax Digital for Income Tax – HMRC guide   and your own accountant will be able to provide help and support.

Also at RPG Chartered Accountants, we are always happy to have an initial chat.  Please email us on [email protected] or call 0161 608 0000.