MAKING TAX DIGITAL FOR INCOME TAX – CHANGES INCOMING AND WHAT YOU NEED TO KNOW AND DO
A key change to self-assessment is coming into effect from April 2026. At CRM we are mindful that our clients need to be aware of these changes, prepared for the transition and feel supported by CRM on this journey.
KEY DATES
From April 2026: Making tax digital for income tax will be introduced for businesses, self-employed individuals and landlords with income over £50,000.
From April 2027: Making tax digital for income tax will be introduced for businesses, self-employed individuals and landlords with income over £30,000.
From April 2028 – Self-employed people and landlords earning more than £20,000 will need to become MTD-compliant.
WHAT DOES THIS MEAN?
MTD for IT compliance will mean that self employed individuals and landlords will need to:
- Submit four quarterly updates and a final declaration to HMRC. This includes all income and expenditure for the quarter.
- Keep digital records
- Use MTD compatible software
| Before MTD | After MTD |
| 1 annual submission for business and personal | 4 quarterly updates for each qualifying business |
| Single self-assessment tax return after the end of the tax year | For each individual taxpayer – 1 annual final declaration that includes all taxable income by 31st January. |
| Online filing by 31st January | Must keep digital records |
| Acceptable to maintain paper records | Filing via MTD compatible software |
| Balancing payment is due by 31st January. Payments on account due 31st January / 31st July. | Balancing payment is due by 31st January. Payments on account due 31st January / 31st July. |
HELP!!! WHAT SHOULD I DO?
CRM are here to help you each step of the way, we are busy working in the background to see what are the best options for our clients. We have designed a flowchart below to get you started:
FAQS
Does the turnover threshold of £50,000 apply to property and trade businesses added together, or to each business in isolation?
The threshold applies to the individual taxpayer’s grand total in turnover.
If the combined turnover is more than £50,000 per annum, should it include employment income too?
No. Income tax paid on employment income is already accounted for via the employer’s payroll arrangements.
What information needs to be recorded under MTD for income tax?
Each transaction must have the following data points recorded digitally: the date of the transaction; the relevant category of expenses; the trade or property business the income relates to; the amount.
Retail businesses will be able to elect to record daily gross takings rather than every single transaction, but only if it would be unreasonable for the business to keep digital records of every individual sale.
I am already registered for MTD for VAT, am I automatically enrolled to MTD for income tax?
No. You need to ensure that you are registered for all relevant tax reporting schemes individually.
What do I need to submit on the final declaration?
The final declaration brings together the details of all other factors/ income and determines your final tax liability for the tax year.
It will include business and non-business income. Unlike the quarterly submissions, you only need to submit one final declaration per taxpayer, not per business.
This replaces the usual self-assessment tax return.
