Making Tax Digital for Income Tax –Tips & How We Can Support You!

Starting from 6 April 2026, HMRC are introducing Making Tax Digital for Income Tax (MTD for IT). This new system will change how you report your income if you have self-employment and/or property rental income which combined exceeds £50,000 in the 2024/25 tax year. There will be a need to record income and expenses transactions on a digital system, and report these quarterly to HMRC as well as submit a final year end tax.

CN Chartered Accountants (CNCA) will be able to deal with any requirements you have if you fall under this regime, and provide the advice you need. Please see our infographic below and scroll down to our FAQ’s.

If you’d like to discuss to your requirements, how MTD will affect you, or how best to prepare, contact your relationship team at CNCA, or email [email protected] or phone (0) 161 495 4700

Download the MTD Road Map (PDF)

To discuss your transition requirements, email [email protected] or phone (0) 161 495 4700

FAQs and Further Information

What’s Changing?

If you fall under the criteria, there is a mandatory requirement to;

Keep digital records using MTD-compatible software.

Have submitted quarterly updates of income and expenses to HMRC.

File an end-of-year digital tax return, replacing the annual Self Assessment tax return.

The qualifying income threshold refers to total income from self-employment and property combined (before any expenses or allowances are deducted).

MTD aims to move the tax system towards more frequent, digital reporting. While some individuals may find it helps with financial organisation, it also means a shift away from the once-a-year tax return process that many are familiar with.

Who is affected?

Starting from 6 April 2026, if your self-employment and/or property rental income combined exceeds £50,000 in the 2024/25 tax year, you will be required to comply with MTD for IT. Limits for those falling within the criteria drop to £30,000 and £20,000 for 6 April 2027 and 6 April 2028 respectively.

What does this mean for you?

If you meet the criteria, you will be required by law to use have maintained for you what is termed ‘compatible software’ to:

Keep and retain transaction-level (income and expenses) digital records for each self-employment and/or property business.

Submit quarterly update reports of your year-to-date transactions for each self-employment and/or property business to HMRC.

Finalise your end-of-year position by providing details of your other personal income sources, making adjustments, claiming reliefs as part of the submission of your digital tax return to HMRC.

This process will replace the annual self-assessment tax return starting from the 2026/27 tax year. Non-compliance will result in financial penalties

Note that your income tax payment dates will remain unchanged.

When does this impact you?

If your combined self-employment and property income is at least £50,000 in 2024/25 you will need to comply with MTD for IT from 6 April 2026. You will need to ensure records are being maintained using an appropriate digital record-keeping system by this date. The first quarterly update report for the 2026/27 tax year will need to be submitted by 7 August 2026.

What is compatible software?

HMRC will not provide software, but you may not need to change your current systems if you use one and it is compatible. If changes are necessary, various MTD-compatible software options will be available. The team at CNCA can help you find the right solutions at a suitable price. We can also maintain these records for you, reducing the burden and cost of having your own software

Why is HMRC doing this?

HMRC aims to improve record-keeping and tax accuracy, reducing tax loss to the exchequer. This requirement applies to everyone within the set criteria, regardless of current record quality. This could be an opportunity to review your processes and identify advantages of using compatible software, such as cloud record-keeping for real-time data and strategic planning.

What are the next steps?

CNCA can work with you to prepare, explore options, and find a solution that works for you and your requirements. With extensive experience providing solutions to HMRC digitalisation requirements, CNCA has supported many clients with similar regimes for VAT.

Simply contact your relationship team, or email [email protected] or phone (0) 161 495 4700

Consider taking part in the testing programme

HMRC is running an MTD for IT testing programme throughout 2025/26. Participating can help you get familiar with digital record-keeping and quarterly reporting before they become mandatory. You can sign up at any time during 2025/26, and penalties for late quarterly reports will not apply during the test period.

Simply contact your relationship team, or email [email protected] or phone (0) 161 495 4700 for more details if you’d like to participate.

We are here to help

With extensive experience of providing solutions to a variety of businesses at different stages of transitions, CNCA can provide you with value-added support and the best solution for you and your requirements. The infographic above by CNCA provides a visual guide to the MTD roadmap and relevant considerations.

To discuss your transition requirements, contact your relationship team, or email [email protected] or phone (0) 161 495 4700