MTD for Income Tax – What You Need to Know
Making Tax Digital for Income Tax.
What You Need to Know.
What is MTD for Income Tax?
Making Tax Digital (MTD) is HMRC’s plan to modernise the way businesses, individuals and landlords manage their tax affairs. Instead of completing a yearly tax return, you’ll need to keep digital records and send updates to HMRC through approved software.
From April 2026, MTD for Income Tax Self Assessment (ITSA) will apply to self-employed individuals and landlords with an annual income above £50,000. From April 2027, it will extend to those earning more than £30,000.
👉 Already worried about your next return? Take a look at our Self Assessment service.
Who is affected?
You’ll need to follow MTD for Income Tax if you are:
Self-employed with business income over £50,000 (from April 2026).
A landlord with rental income over £50,000 (from April 2026).
From April 2027, this applies to those earning between £30,000 and £50,000.
If your total qualifying income is below £30,000, you won’t need to join MTD for now. HMRC has also paused plans to extend MTD to partnerships.
What changes under MTD?
Instead of sending one Self Assessment tax return each year, you’ll need to:
Keep digital records – using software like Xero or other HMRC-approved apps.
Send quarterly updates – every three months you’ll submit income and expense summaries to HMRC.
End-of-period statement (EOPS) – at the end of the tax year you’ll confirm the final figures, making any adjustments for reliefs or allowances.
Final declaration – instead of a Self Assessment return, you’ll submit a single final declaration that covers all your income sources.
👉 Not sure which software will suit you? Our Software Advisory service can help you choose the right digital tools.
Why is HMRC making this change?
HMRC believes MTD will:
Reduce errors by encouraging real-time record keeping.
Give you a clearer picture of your tax position throughout the year.
Move the system away from one big annual return to a “little and often” approach.
In practice, it means fewer surprises and better cash flow planning.
How to prepare
(and how we can help)
If you’re a business owner or landlord, the best thing you can do is start preparing now:
Switch to digital records – begin using HMRC-approved software like Xero to keep your books up to date.
Work with your accountant – we can set up the right systems, guide you through quarterly reporting, and make sure you’re always compliant.
Stay ahead of changes – with new HMRC updates expected, having the right support in place will give you peace of mind.
At PJE Accountants and Advisors, we’ve already helped hundreds of clients transition to digital bookkeeping. As Xero Platinum Partners and Xero Award Finalists 2025, we know the software inside out and can make MTD for Income Tax straightforward for you.
Whether you’re a sole trader, landlord, or running a growing business, we’ll put the tools and support in place so you can focus on running your business - not worrying about tax admin.
👉 See our pricing and discover how cost-effective it can be to have expert support in place.
👉 Contact us at PJE to start preparing for MTD today.
Help me with MTD for Income Tax
Posted - 26 September 2025