Making Tax Digital for Income Tax (MTD IT)

What accountants and tax advisors need to know

  • From April 2026, sole traders and landlords with total combined income above £50,000 must comply. The income streams are:

    • Self employed income

    • Income from property

  • By April 2027, this will extend to those earning over £30,000.

  • By April 2028, this will extend to those earning over £20,000.

  • Who is affected? Anyone who populates the SA103, SA105 or SA106 boxes on their tax return.

  • How is it calculated? Based on the Current Year Minus Two method - so 2026/27’s return is based on the information found in 2024/25’s return. As HMRC haven’t received the tax returns for this year yet, they are sending out letters to those most likely to be affected (those they think have income over £50,000 for the tax year 2026/27.

  • The key here is getting digital records up to date.

Requirements

  • Taxpayers must maintain digital records and submit quarterly updates using compatible software.

  • Quarterly updates are not tax returns. They are unadjusted summaries of income and expenditure

  • HMRC are introducing Multi Agent Access. For the first time clients will be able to have more than one agent, meaning that accountants can work with bookkeepers like never before.

    • Clients can have one agent for quarterly submissions (bookkeeping)

    • Clients can then have one agent for the final declaration (accounting)

  • The self assessment tax return will still need to be submitted at the end of the year.

    • Dividend income and partnership income is not included in MTD quarterly submissions

    • Other income is reported as normal through the MTD submission at the end of the year.

What you need to do now

  • Sign up to MTD IT (HMRC won’t do that for you)

  • Pick an MTD IT compliant software to make your quarterly submissions

  • Segment your clients to know which clients will need submissions from April 2026.

How we can help

We provide MTD IT submissions for your clients, enabling you to focus on the year end tax returns.

By outsourcing MTD IT submissions, you can focus on your business.

We also provide consultancy services to support you to segment your client base, provide advice on the most suitable softwares, and advise on how and when to contact your clients.

Contact us to get started