MTD IT

What is Making Tax Digital for Income Tax (MTD IT)?

Making Tax Digital for Income Tax (MTD IT), previously known as Making Tax Digital for Income Tax Self-Assessment (MTD for ITSA), is the next step in modernising the UK tax system.

The aim is to change the way that self-employed individuals and landlords with a UK National Insurance number report their income and tax liabilities. Under MTD IT the current self-assessment regime will be replaced with 4 quarterly submissions throughout the tax year and a final declaration made by the 31st January the following year. Individuals will need to keep digital records and submit their returns through compliant bookkeeping software.

Who does MTD IT apply to?

MTD IT is being made mandatory through a phased approach. The aim is for it to eventually apply to all sole traders and landlords and is starting in April 2026 for individuals with total gross income in excess of £50,000 from both sources. In April 2027 this threshold will be lowered to £30,000 with a further threshold change to £20,000 the following year.

Landlords and sole traders who earn over £50,000 in the tax year 2024/25 will be notified of their responsibility to register for MTD IT following the submission of their Self-Assessment Tax Return and should begin to prepare for the upcoming changes in advance of the 6th April 2026. If your gross income is under this threshold it is still beneficial to begin preparing for Making Tax Digital so that you can ensure compliance when the thresholds are lowered.

If you are not sure if MTD IT will apply to you please get in touch and we will be happy to help ensure you are submitting the correct returns to HMRC.

Sherwin Currid – Your Making Tax Digital Accountants

We appreciate that the transition to Making Tax Digital for Income Tax can seem overwhelming and it will being a significant rise in the record keeping requirements for the self employed and landlords. We offer a comprehensive service to those needing to make MTD IT submissions to ensure that you meet your filing deadlines.

We work with a variety of software providers and can advise you on the best fit for your needs. Our team of personal tax specialists will also review your bookkeeping and quarterly submission figures in order to ensure compliance with the new legislation.

If you wish to discuss how we can help you meet the new MTD requirements please get in touch to arrange an initial consultation.

Cloud accounting experts

We have been working with cloud accounting software for over a decade and have close relationships with various providers of MTD IT compliant software. Our team of personal tax specialists can help you settle on a software that best suits you and will guide you through the transition to keeping your records on cloud accounting software.

We have extensive experience with the latest software products such as Xero, FreeAgent, and QuickBooks as well as many others. Our team stay up to date with the latest advancements in cloud accounting and are informed of many of the MTD IT offerings by software firms.

With Sherwin Currid, finding and using the right software for your tax submissions is simple. You can also benefit from the ability to view your finances in real time and receive personal tax estimates, all from your software.

Personal tax advice

Depending on your circumstances, completing your tax returns can be complex. Sole traders and landlords often have various expenses that can be claimed and have opportunities to operate more tax efficiently. Our team can advise you on how to ensure you are being tax efficient as well as supporting you with your digital record keeping and online submissions

Making Tax Digital Income Tax timeline

There have been significant revisions to the start date of MTD IT since it was first announced but there are now firm dates for the first phase of MTD IT.

It is important to remember that the thresholds for MTD IT are based off gross income from both self-employment and property income.

• April 2026 – Individuals earning over £50,000
• April 2027 – Individuals earning over £30,000
• April 2028 – Individuals earning over £20,000

The public testing phase began in April 2025 for those wanting to try reporting on the new system when there are no penalties. The first mandatory quarterly updates for qualifying taxpayers will begin at the start of the tax year in April 2026. As confirmed in the Spring Statement, partnerships and those earning under £20,000 from self-employment and rental property will have to enrol from a later date that has not yet been confirmed.

Submission requirements for Making Tax Digital

Submission requirements for Making Tax Digital

For those that are enrolled for Making Tax Digital for Income Tax there will be a minimum of five submissions a year. You must make a submission each quarter of the tax year as well as a final declaration to confirm your tax position after the end of each year.

Monthly submissions must be made by the 7th of the month following the end of the quarter. For instance the first quarter runs from the 6th April to the 5th July and must be submitted to HMRC by the 7th August. You can elect to report on calendar quarters in which case the first quarter would run from the 1st April to the 30th June but is still due by the 7th August. A quarterly submission must be made for each source of income in the year, therefore if you have income from a rental property and a sole trade you will need to make two submissions per quarter. Foreign rental properties count as a separate type of income as well so some people may need to make three submissions each quarter as well as a final declaration.

The final declaration of your tax position will be due by the 31st January after the end of the tax year, the same deadline as Self-Assessment tax returns are now. This submission will also include any other income such as PAYE, bank interest or pension income.

Does MTD IT replace Self Assessment?

For those individuals who must comply with the Making Tax Digital for Income Tax requirements the new process will replace the current Self-Assessment process. Individuals that are not obliged to register for Making Tax Digital will continue to submit their income tax returns through the current Self-Assessment process for the time being.

While the deadline for making the final declaration is the same as the current online Self-Assessment deadline the way in which the submissions are made differ. Furthermore, under MTD IT all records will need to be kept digitally and individuals who earn over the thresholds will need to change the way that they record and track their business expenses to comply with the new rules.

Impact of MTD on sole traders

Sole traders that are obliged to register for MTD IT should begin to prepare for the new rules now to mitigate the stress of the reporting requirements.

The biggest change for sole traders will be the need to keep digital records throughout the year using cloud accounting software. For those that have not used online accounting systems before this will be a big change in the way that records are kept. The advantages of utilising the latest software is that self-employed individuals will gain real time insights into their business and can use the features of software to stay on top of their invoicing and expenses.

By partnering with Sherwin Currid for your sole trade tax compliance you can ensure that your enrolment and continued compliance with MTD is a smooth process. Our team can provide support throughout and will ensure you meet the filing deadlines.

How can sole traders prepare for Making Tax Digital?

The first step in preparing for Making Tax Digital for sole traders is registering with HMRC. If you suspect you will be over the threshold for registration, or would like advice on if you qualify, you should speak to an accountant or tax advisor to ensure you remain compliant.

You will also need to ensure that you have a compliant software set up and are confident in uploading your income and expenses. If you partner with Sherwin Currid we can help you with setting a software that suits you and provide guidance on how to get the most out of it. We also offer a bookkeeping service to alleviate any stress and leave you more time to focus on your work.

Getting prepared early will help you steer clear of any penalties or issues when the deadlines for registration come around. If you would like to speak to one of our team about MTD IT you can book a meeting here.

Making Tax Digital for UK property rentals

Landlords with UK property rental will fall under the scope of MTD IT based on their qualifying income. Landlords who earn more than £50,000 from their property business and any self-employment will need to change how they manage their finances from April 2026. Even if you earn under this initial threshold it is worth thinking about MTD IT if you earn over £20,000 from qualifying sources.

While this reporting change is daunting, Sherwin Currid can help landlords manage their tax affairs digitally. We offer landlords help with software adoption to ensure income from all properties is tracked and reported on suitable software. We make landlords’ compliance easier, ensuring you have a seamless transition to Making Tax Digital.

Making Tax Digital for foreign property rentals

Landlords with foreign property rentals are also affected by the Making Tax Digital (MTD) initiative. If your total UK and foreign rental income exceeds the MTD registration thresholds, or if combined with other self-employment income, you will need to start thinking about preparing for this soon.

If you have income from foreign property as well as a UK property or sole trade you will need to make separate quarterly updates each quarter and therefore planning ahead to ensure you are supported in the transition will greatly benefit you. At Sherwin Currid we work with many landlords already and can help you with all aspects of your taxation and reporting, guiding you through each step of the way.

Keeping digital records as a landlord

MTD IT will require digital record-keeping for all taxpayers under its scope. This means keeping all records digitally in compliant software rather than just a folder of receipts and invoices. By planning ahead for this change you can prepare for the new requirements and get to grip with an accounting software that suits you.

Sherwin Currid offers cloud accounting software and support that makes it easy to maintain and submit records. Whether you are managing expenses or income we will advise you on the best software for you, helping you to log transactions securely and efficiently.

MTD IT compliant software

At Sherwin Currid we make it easy to follow the new rules with HMRC-approved compatible software. We work with a range of software providers to provide the best solutions for landlords and sole traders to meet MTD requirements.

With over a decade of experience of working with cloud accounting software and a proactive friendly team you can rest assured that you will be fully supported, regardless of your software choice.

FreeAgent

FreeAgent accounting software is a powerful product originally designed for small businesses, contractors and freelancers. They have a simple and intuitive online system that utilises automated bank feeds to ensure you track all of your income and expenses. With FreeAgent you can manage your quarterly submissions for all types of income in one place and keep track of your earnings over the year.

We have worked with FreeAgent for over 15 years and highly recommend it for people who want a simple software that alleviates the stress of bookkeeping. Their new package for MTD is fully compliant with MTD IT and offers a comprehensive solution for both sole traders and landlords.

Xero

Xero are another software provider that have offered a market leading product for smaller businesses for years. One of the advantages of Xero is the powerful reporting options that could benefit sole traders wishing to track their income and expenses with frequent reporting. As Xero is cloud based you can track your expenses on the go as long as you have access to the internet.

Dext

If you are concerned about keeping track of your expenses Dext simplifies expense tracking with its advanced data capture automation. You can upload receipts on the go and Dext will analyse them to extract the supplier, date and amount to allow you to easily reconcile bills to the expenses from your bank transactions. You can submit your quarterly returns from inside the software and see your income and expenses in real time.

Switching accountants to Sherwin Currid

We know the importance of finding the right accountant, which is why we prioritise the needs of our clients and work hard to deliver a quality, personal service that our clients appreciate.

Our team are fully prepared for MTD IT and can guide you through registration, using cloud accounting software and any other questions that you may have. We offer proactive advice and will be in touch frequently to ensure that you do not miss any deadlines and can ensure compliance.

If you already have an accountant we will get in touch with them and arrange for the transfer of your records, ensuring a smooth transfer to us.

If you wish to arrange a consultation to discuss how we can help you please reach out and one of our team will be happy to arrange a meeting.