Making Tax Digital for Income Tax (MTD IT) represents a significant shift in how self-employed individuals and landlords manage their tax obligations. Designed to modernise the UK tax system, MTD IT requires the use of digital tools to record and report income and expenses. With phased implementation starting in April 2026, it's essential for small business owners and landlords to understand these changes, prepare accordingly, and ensure compliance.
In this blog, we’ll break down everything you need to know about MTD IT and how to get ready for the transition.

What is MTD IT?
MTD IT (Making Tax Digital for Income Tax) is part of HMRC’s initiative to modernize the tax system. It requires self-employed individuals and landlords to keep digital records of their income and expenses and submit quarterly updates to HMRC using MTD-compatible software.
Who does MTD IT apply to?
MTD IT applies to:
Self-employed individuals and landlords with annual business or property income exceeding £50,000 from April 2026.
Those earning between £30,000 and £50,000 will need to comply from April 2027.
Future plans for individuals earning below £30,000 are still under consultation.
When does MTD IT start?
April 2026: For individuals earning over £50,000 annually.
April 2027: For individuals earning between £30,000 and £50,000 annually.
What records do I need to keep digitally?
You’ll need to maintain digital records of:
Income
Expenses
Bank transactions related to your business or property
These records must be stored in MTD-compatible software and submitted to HMRC via quarterly updates.
How often do I need to report under MTD ITSA?
You’ll need to submit:
Four quarterly updates summarising your income and expenses throughout the year.
An End of Period Statement (EOPS) at the end of the tax year to confirm your figures.
A Final Declaration to declare all your income and confirm your tax liability.
What software do I need for MTD IT?
You’ll need MTD-compatible software to manage your records and submit updates such Xero. We can help you set this up.
What happens if I don’t comply with MTD IT?
Failure to comply with MTD IT requirements may result in penalties from HMRC. These could include fines for late submissions or non-compliance with digital record-keeping rules.
Do I still need to file a Self Assessment tax return?
Yes and No, MTD IT replaces the traditional annual Self Assessment tax return. Instead, you’ll submit quarterly updates, an EOPS, and a Final Declaration through your MTD-compatible software, the final declaration will be very similar to your current self assessment.
How can BCT Accountants help me with MTD IT?
We provide:
Expert advice tailored to your situation.
Setup and training for MTD-compatible software.
Assistance with quarterly updates and year-end submissions.
Ongoing support to ensure compliance and peace of mind.
What should I do now to prepare for MTD IT?
Determine when MTD IT will apply to you based on your income.
Choose and set up MTD-compatible software.
Organise your records to ensure accuracy.
Seek professional advice to streamline the transition.
At BCT Accountants, we specialise in supporting small and medium businesses through these changes to Self Assessment and MTD IT. Get in touch today with Catherine on 01423 431 889 or email catherine@bctaccountants.co.uk for your FREE consultation call.
Please note: all stats are accurate for the 2024/25 tax year.
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