Making Tax Digital for Income Tax is an HM Revenue & Customs (HMRC) initiative to modernise the tax system. It requires eligible sole traders and landlords to use compatible software to keep digital records and submit updates to HMRC quarterly along with other figures at year end, replacing the traditional annual tax return process.
Key Requirements of MTD for Income Tax
If you are a self-employed individual or landlord with a qualifying income above the relevant threshold, you must use MTD-compatible software to:
- Keep digital records of all your business or property income and expenses.
- Submit quarterly updates of your income and expenses to HMRC through the software.
- Review and, if necessary, submit personal income, tax reliefs and deductions.
- Submit a final declaration (yearly tax return) through the software by the 31 January deadline following the end of the tax year.
Who is Affected and When
The mandation of MTD for Income Tax is being phased in based on your total annual gross income from self-employment and property:
- From April 2026: for those with a total qualifying income over £50,000.
- From April 2027: for those with a total qualifying income over £30,000.
- From April 2028: for those with a total qualifying income over £20,000.
Finding MTD Software
HMRC does not provide its own software, so you must select a commercial product that works with the MTD system. Software options include comprehensive cloud accounting packages, simple apps, or bridging software that links spreadsheets and other file formats to HMRC's system.
You can find a list of recognised software on the official GOV.UK website. Popular full MTD accounting solutions include Xero and Quickbooks, while Easy MTD is an option if you require bridging software.
Get MTD Compliant with Easy MTD
If you need bridging software so you can carry on using spreadsheets or software that isn’t MTD compatible, look no further than Easy MTD. This HMRC-recognised Windows application allows you to continue recording your sole trader or landlord figures in a spreadsheet or other file format, meaning there is no requirement to move to expensive and complicated accounting packages.