“Making Tax Digital is coming, and your tax return is disappearing.”
That’s the reality facing self-employed individuals and landlords across the UK. From April 2026, HMRC is scrapping the annual Self Assessment process you’ve known for years and replacing it with a completely new system – one that requires digital records and quarterly updates.
So, what do you need to do? Well, if you’re a sole trader or landlord, you may need to take action now.
Here’s an easy-to-follow practical guide on what you need to do about MTD for self-assessment and landlords and when you need to do it.
Step 1: Working Out If MTD Applies To You
From April 2026, HMRC will begin rolling out MTD for Income Tax Self Assessment in phases:
- April 2026 – Self-employed people and landlords with gross income over £50,000
- April 2027 – Those with gross income over £30,000
- April 2028 – Those with gross income over £20,000
This replaces the current system of filing a single annual tax return. Essentially, the self-assessment as you know it will be gone for anyone who falls under MTD.
1. Are You Exempt?
You may be exempt if you have a genuine inability to use digital tools due to age, disability, or remote location without internet access.
Members of religious societies whose beliefs prevent them from using computers may also qualify for exemption. Additionally, exemptions apply to those with income below £50,000 from property abroad, estates of deceased persons in administration, non-resident companies, and trustees of registered pension schemes.
Finally, some groups have been granted deferrals, including Lloyd’s underwriters, partners in partnerships with corporate partners, and those claiming certain allowances like the Blind Person’s Allowance.
If you believe you might be exempt, most will need to apply to HMRC directly – exemptions aren’t granted automatically unless you have an automatic deferral.
See HMRC’s exemption guide here.
2. Understanding The Income Threshold
MTD thresholds are based on your gross income – that’s your total income before any expenses or deductions:
- For landlords: This is your total rental income before deducting mortgage interest, repairs, agent fees, or other costs
- For self-employed: This is your total sales or fees before deducting any business expenses
If you have both types of income, you need to add them together to determine which phase affects you.
For example:
- £35,000 from self-employment + £18,000 from rental income = £53,000 total
- This would place you in the first phase (April 2026)
Income from employment, pensions, investments, or savings doesn’t count toward these thresholds.
HMRC will use your income from the tax year two years before the MTD start date to determine if you need to join. For the first phase in April 2026, they’ll look at your 2024/25 income figures.
This two-year lookback period gives you time to prepare, but it also means your current income levels are already determining your MTD timeline. Waiting to calculate where you stand is not a luxury you can afford.
Action point: Understand if MTD will apply to you based on your figures two years before MTD.
3. Understand Key MTD Rules and Deadlines
Here are your responsibilities under MTD:
- Digital record-keeping – Paper records will no longer be acceptable. All business transactions must be recorded using MTD-compatible software.
- Quarterly reporting deadlines – 7th August for April-June quarter. 7th November for July-September quarter. 7th February for October-December quarter. 7th May for January-March quarter.
- End of year statement – Submit a final declaration by 31st January following the tax year end, finalising your tax position and replacing the current Self Assessment.
- Digital links – Information must flow digitally between different parts of your record-keeping systems without manual re-entry.
- Software compatibility – Your chosen software must be officially recognised as “MTD-compatible” by HMRC.
These requirements mean you’ll need to maintain your records much more regularly and be prepared for more frequent interaction with HMRC throughout the tax year.
Action point: Make sure you’re 100% clear on your responsibilities to avoid fines.
Step 2: Implementing Digital Systems
Once you’ve identified your MTD start date, you’ll need to establish robust digital systems well in advance.
1. Choosing the Right Software
You’ll need compatible software that can both maintain digital records and communicate with HMRC. Without this, compliance is simply impossible.
Popular options include Xero, QuickBooks, FreeAgent, and Sage, with specialised solutions like Landlord Studio for property portfolios.
Take your time with this decision – use free trials to properly test different platforms. If you use an accountant, ask for their advice.
2. Setting Up Your Digital Workflow
You’ll need to create a practical system for capturing and organising your financial information:
- Bank feeds – Connect your business accounts to automatically import transactions
- Digital receipt management – Develop a simple but effective method for capturing and storing receipts
- Income tracking – Set up straightforward systems to record all business income promptly
- Expense categorisation – Create clear categories that match your tax requirements
Action point: Your system needs to work fluidly from day one to avoid accruing penalty points for missed deadlines.
Step 3: Ongoing Compliance
Let’s talk about life after you’ve set everything up – how you’ll actually handle MTD on an ongoing basis.
1. Developing Consistent Habits
MTD needs a completely different rhythm to your tax affairs. Set aside a specific time each week for basic bookkeeping. Just 10-30 minutes should do it for most small businesses.
Once a month, spend a bit longer checking that everything’s in order:
- Look for missing receipts
- Check for uncategorised transactions
- Reconcile your accounts with bank statements
As each quarterly deadline approaches, block out time in your calendar about two weeks before to prepare your submission. This buffer gives you breathing room if you discover any issues.
These regular habits make the whole process much less painful. The key is consistency – small, regular efforts prevent the overwhelming tax crunch many self-employed people dread.
2. End of Year Finalisation
While your quarterly updates are important, they’re not the whole story. The end-of-year statement is where everything comes together.
This final declaration is more comprehensive than your quarterly updates. It pulls in all your income sources – not just business or rental income but also things like employment earnings, investments, or pensions. It’s where you’ll:
- Claim all your tax reliefs and allowances
- Factor in your business expenses
- Calculate exactly how much tax you owe
The deadline stays the same – 31st January – but the experience will feel different. Instead of starting from scratch, you’ll be finalising information you’ve been maintaining all year. It becomes more about reviewing and checking than frantically gathering documents.
3. Testing Before Going Live
Before MTD becomes mandatory for your business, give everything a proper test run:
- Try recording your transactions for at least a month
- Practice categorising different types of income and expenses
- Generate the reports you’ll need for your submissions
- Familiarise yourself with how the actual submission process works
This hands-on practice helps you spot any issues while there’s still time to sort them out. Many businesses find it helpful to run a full quarter’s test before their MTD start date – it builds confidence and irons out any wrinkles in your new processes.
Action Point: Ensuring everything works perfectly will help you swerve issues. Your accountant can help you.
Your MTD For ITSA Checklist
Here’s a practical checklist you can use to check you’re good to go for MTD:
| Step | Action | Details | When to Do It | Why It Matters |
|---|---|---|---|---|
| 1. Check If MTD Applies To You | Determine if you’re in scope for MTD | Check if your gross self-employed + rental income exceeds: • £50k (by 2024/25 → join in 2026)• £30k (by 2025/26 → join in 2027)• £20k (by 2026/27 → join in 2028) | NOW (use 2024/25 income as your basis for 2026 start) | So you know when MTD applies to you personally |
| Combine income sources | Add gross income only – no deductions allowed | NOW | Threshold is based on gross income, not profit | |
| Exempt? | Apply via HMRC if digitally excluded due to age, disability, religion, or remote location | Before your MTD phase starts | You must apply – not automatic for most | |
| 2. Learn the Key MTD Rules | Understand new obligations | You must: • Keep digital records• File quarterly reports• Submit annual final statement• Use MTD-compatible software | Immediately after confirming you’re in scope | Missing deadlines = penalties |
| Know the quarterly deadlines | Due dates: • 7 Aug (Apr–Jun)• 7 Nov (Jul–Sep)• 7 Feb (Oct–Dec)• 7 May (Jan–Mar) | Each quarter after MTD starts | You’ll file 4 times/year instead of once | |
| 3. Set Up Digital Systems | Choose MTD-compatible software | Options: Xero, QuickBooks, Sage, FreeAgent, Landlord Studio, etc. Test with free trials | At least 6–9 months before MTD starts for you | Avoid last-minute scrambling; ensure compatibility |
| Establish digital workflows | • Connect bank feeds• Scan/store receipts• Track income• Categorise expenses | Before your first quarter begins | Helps ensure smooth and compliant recordkeeping | |
| 4. Practice Using Your System | Get familiar with your setup | Regularly input income and expenses, categorise transactions, and generate reports | As soon as your system is set up | Builds confidence and reduces errors once live |
| 5. Start Regular Bookkeeping Habits | Weekly: update records | Set 10–30 mins/week to log income, expenses, receipts | Start now to build habit | Makes quarterly reporting quick & easy |
| Monthly: review your records | Reconcile to bank, catch missing/uncategorised items | Each month | Reduces errors before quarterly filing | |
| Quarterly: file update | Use your software to send return to HMRC | By 7th of following month each quarter | Meet deadlines to avoid penalties | |
| 6. Prepare End-of-Year Statement | Finalise your annual report | Includes all income (employment, investments, etc.), plus reliefs, allowances | By 31 January each year | Replaces your traditional self-assessment return |
| 7. Get Professional Support | Work with accountant (optional but advised) | Services include: • MTD readiness review• Software setup• Training• Ongoing support | Anytime during preparation | Saves time, avoids errors, and may reduce tax |
| 8. Stay Informed | Monitor HMRC updates | Guidance may change; subscribe to updates or check with your accountant | Ongoing | Keeps you compliant and up to date |
How Double Point can help
Our team of chartered accountants at Double Point has been tracking and preparing for these MTD changes since they were first announced.
We can help you through every stage of getting ready:
- MTD readiness review – We’ll look at your current setup, confirm which MTD phase affects you, and pinpoint exactly what needs to change before your start date.
- Software guidance and setup – We’ll help you pick the right MTD-compatible software and set it up properly from the beginning, tailored to your business.
- Plain-English training – We offer hands-on training focusing on exactly what you need to know, without overwhelming technical jargon.
- Flexible ongoing support – Whether you want to handle most things yourself with occasional check-ins or hand over your MTD compliance entirely, we have options that work for you.
Our team of chartered accountants has decades of combined expertise and we’re committed to making your MTD transition smooth and straightforward. Best of all, we’ll help you use your more frequent financial data for proactive tax planning throughout the year, often finding savings you might otherwise miss.
You can read our more comprehensive guide here.
Book a free consultation with Double Point today to chat about your specific MTD needs.
