Making Tax Digital

Making Tax Digital for Income Tax Self-Assessment

Use of MTD is phased depending on annual income (NB: this means turnover, not profit):

• April 2026: For incomes over £50,000
• April 2027: For incomes between £30,000 and £50,000
• No set date for incomes below £30,000, but government says, ​“within this parliament”, i.e. 2029 at the latest

Quarterly updates are due:

• Q1 (April 6 – July 5): August 5
• Q2 (July 6 – October 5): November 5
• Q3 (October 6 – January 5): February 5
• Q4 (January 6 – April 5): May 5

The end of period statement is due by January 31 following the tax year, as it is currently with tax return. Annual tax payments will be due by January 31, like how it is now.

There will also be new penalties for late submissions, and payments will be introduced using a points system. For example: 

• Each missed deadline results in a penalty point. Reaching a set limit incurs a £200 fine
• Monthly submissions: 5‑point limit
• Quarterly submissions: 4‑point limit
• Annual submissions: 2‑point limit
• Multiple Failures: Generally, only one point is given for multiple failures in the same month, with some exceptions
• Point Expiry: Points last for two years. To reset to zero after a fine, you must comply and submit all due returns within the preceding 24 months
• HMRC Discretion: HMRC can choose not to issue points or penalties and offers a review and appeals process

Although Making Tax Digital Income Tax Self-Assessment may seem far off, starting to make preparations now will ease the transition and help avoid penalties.

Sole traders with a turnover (income) above £50,000 in 2025–2026, will be expected to use Making Tax Digital software and report quarterly from April 2026. To get started you can: 

• Download the HMRC app. Not only will this support with the changes as mentioned above, but it also opens the door to checking national insurance, benefits, free childcare etc. If you don’t already have a Gateway account, you will be prompted to open one to access. Find out if and when you need to use Making Tax Digital for Income Tax.
• New banking apps/​accountancy tools. As mentioned above, research what’s out there in terms of accountancy tools and applications for making tax digital compliance. Remember, learning new systems and transferring data can take time!
• Consult with current accountants or financial professionals to ensure a smooth transition. 
• Improve your knowledge. The HMRC offers signposting with all the above outlines. 

• Reduced errors and human mistakes
• Quicker and easier tax filing
• Better understanding of tax obligations throughout the year
• Less paperwork and more environmentally friendly
• Some people are already using the money management apps

• Time and resources needed to update accounting practices
• Costs of new software and potential increased accountancy fees
• Possible future quarterly tax payments reducing annual interest income