Making Tax Digital for Income Tax
April 3, 2025
HM Revenue & Customs are introducing Making Tax Digital (MTD) for Income Tax from 6 April 2026. This will change the way sole-traders and landlords keep their records and report their income and expenses.
What is Making Tax Digital for income tax?
Digital records must be provided on a quarterly basis plus the usual year-end tax return.
Who needs to do this?
Sole traders and landlords with turnover > £50,000 from 6 April 2026.
Sole traders and landlords with turnover > £30,000 from 6 April 2027.
Sole traders and landlords with turnover > £20,000 from 6 April 2028.
HMRC will use the figures reported on the 2024/25 tax return to assess whether taxpayers are required to register and report using MTD.
What counts as turnover?
Sole traders – gross income before expenses.
Landlords – Your share of the gross rental income including foreign rental income.
Where both is received, the combined total income is considered.
What type of digital records are required?
Digital records of income and expenses can be provided using approved purpose-built software such as Xero. Alternatives are available for people who do not have access to computers.
Tax payments
The due date of tax payments will not change. The year ended tax return and balancing tax payments remain payable by 31 January following the end of the tax year. Payments on account will continue to be payable by 31 January and 31 July where applicable.
What are the next steps?
If you have turnover for 2024/25 exceeding the £50,000 threshold, you will need to register for MTD before 5 April 2026 and let HMRC know which method you will be using for the quarterly reports.
Begin or continue recording your income and expenses digitally from 6 April 2026 and file reports on a quarterly basis.
How can Lovewell Blake help?
We offer expert support and assistance and for those who are already using or would like to use our recommended software provider Xero.
Full bookkeeping services are available to assist clients to record their income digitally.
Registration for MTD on behalf of all clients where required.
We will be offering events to learn more about MTD and integration with software. Once the details of these are released, the information will be found in our monthly newsletters and on the events section of our website.
Further information can be found here: https://www.lovewell-blake.co.uk/news/mtd-for-income-tax