• Taxation
• ||
• October 6, 2025

From April 2026, HMRC will introduce a major change to the way self-employed individuals and landlords report their income. Making Tax Digital for Income Tax Self Assessment (MTD ITSA) will require eligible taxpayers to keep digital records and submit quarterly updates instead of filing a single annual Self Assessment return.

This shift aims to modernise the UK tax system, improve accuracy, and reduce unexpected tax bills — but many taxpayers will need to adapt their bookkeeping and reporting habits ahead of the deadline.

Who Will Be Affected by MTD for Income Tax in 2026?

From 6 April 2026, MTD will apply to:

• Self-employed individuals
• Landlords
• Anyone with annual business or property income over £50,000

If your combined income from self-employment and property is below £50,000, you will join MTD later (from 2027 at the £30,000 threshold).

What Changes Under MTD ITSA?

Under the current system, most people file one annual Self Assessment tax return.

Under MTD, you must:

1. Keep digital records

This includes income, expenses, receipts, and invoices stored in MTD-compatible software.

2. File quarterly updates to HMRC

Every three months, you will submit a summary of your business income and expenses.

3. Submit an End-of-Period Statement (EOPS)

This final statement confirms your annual figures.

4. Submit a Final Declaration

This replaces the traditional Self Assessment return.

Why HMRC Introduced MTD

MTD is designed to:

• Reduce tax errors
• Improve the accuracy of reporting
• Give taxpayers a clearer view of their liabilities throughout the year
• Reduce large, unexpected tax bills
• Encourage better financial planning for self-employed individuals and landlords

For many taxpayers, MTD will mean fewer surprises at year-end because figures are reported more frequently.

How to Prepare for Making Tax Digital 2026

Getting ready early will make the transition smoother. Here’s what you should start doing now:

1. Switch to Digital Record-Keeping

You must use software compatible with MTD, such as:

• Xero
• QuickBooks
• FreeAgent
• Sage

Manual bookkeeping or spreadsheets alone will no longer be sufficient.

2. Organise Your Income & Expense Records

Ensure your receipts, invoices, and transactions are recorded consistently.

3. Separate Business & Personal Accounts

This reduces errors and keeps digital records cleaner.

4. Speak to Your Accountant

A digital-ready system ensures:

• Accurate quarterly updates
• Fewer errors
• Better tax planning
• Compliance with HMRC deadlines

At Adept Accountax, we support clients through full MTD preparation, setup, and software training.

Who Is Exempt from MTD?

You may be exempt if:

• You are digitally excluded due to age, disability, or location
• You have religious grounds
• Your income is below the threshold
• Your business is not required to join until 2027

For full eligibility guidance, refer to HMRC:
https://www.gov.uk/guidance/check-if-youre-eligible-for-making-tax-digital-for-income-tax

Final Thoughts

MTD for Income Tax marks a significant shift in how the self-employed and landlords manage their financial reporting. While quarterly updates may feel like an extra burden initially, digital reporting will provide more clarity, fewer errors, and better tax planning.

Preparing now — choosing the right software, maintaining digital records, and speaking with an accountant — will ensure a smooth transition ahead of the 2026 deadline.

If you need support with MTD registration, software setup, or digital bookkeeping systems, the team at Adept Accountax is here to help.