Making Tax Digital (MTD) Support

Making Tax Digital (MTD) is part of HMRC’s wider initiative of modernising, digitising and simplifying the tax system.

MTD for Income Tax (MTD for ITSA)

Effective April 2026, if you’re a sole trader or landlord with qualifying self-employed income over £50,000, you must comply with the new MTD compliance rules.

From 6 April 2026, HMRC will require qualifying individuals to maintain digital accounting records and, instead of completing their annual Self Assessment (SA) tax return, make quarterly digital submissions through compatible accounting software.

The 2026 updates to MTD represent the most substantial shift in personal tax reporting in some time, and it profoundly affects how your finances are recorded all year-round, not just when your year-end submission is due.

If you haven’t yet made the transition to MTD, now is the time to do so. It’s vital to adopt new digital accounting practices and adjust how you meet your tax obligations, to avoid incurring potential fines from HMRC.

Missing the first quarterly deadline (7 August 2026) triggers penalty points under HMRC’s new system. Accumulate four and you’ll face an automatic £200 fine, with further fines for every subsequent missed submission.

At Hamlyns, we’re helping sole traders, landlords and small businesses across Woking, Surrey, and the surrounding areas migrate to and comply with MTD rules, so you stay compliant without the heavy burden of constant, real-time digital accounting.

What Does MTD for Income Tax Mean?

Under MTD for ITSA, you must:

Maintain digital records of all business income, expenses and key transactions
Submit quarterly updates through HMRC-approved accounting software
Complete an End of Period Statement and Final Declaration at the close of each tax year.

The Final Declaration replaces the Self Assessment tax return and remains due by 31 January of the particular tax year.

It’s important to clarify that quarterly submissions are not tax calculations. They are summaries of your financial position submitted to HMRC, and don’t calculate the amount of tax that you owe. For every tax year, there are four reporting periods, which usually have a deadline of a month after the final month in that quarterly period. Missing a quarterly MTD deadline will trigger penalty points under HMRC’s new system.

The income thresholds to be aware of:

From 6 April 2026: Qualifying income above £50,000
From 6 April 2027: Threshold reduces to £30,000
From 6 April 2028: Threshold reduces further to £20,000 (subject to final legislation)

Qualifying income, as determined by HMRC, refers to gross income before expenses. This can include turnover from self-employment, UK rental income and relevant income from property overseas, if relevant.

If your turnover exceeds the threshold, MTD applies regardless of your net profit.

What About MTD for VAT?

MTD for VAT has been in place since April 2019 and is already mandatory for all VAT-registered businesses, regardless of turnover. If your business is VAT-registered, you are already required to maintain digital VAT records and submit returns through compatible MTD software. You’ll likely be well aware that the old HMRC online portal is no longer a viable option.

If you’re not yet fully compliant with MTD for VAT, or you’re unsure whether your current software and processes meet HMRC’s requirements, we can help you get up to speed quickly. For businesses navigating both MTD for VAT and the incoming MTD for Income Tax changes, Hamlyns can ensure your accounting setup covers both obligations cleanly and efficiently.

Professional MTD Compliance Support from Hamlyns

We’re certified across the leading cloud accounting platforms, including Xero and QuickBooks, and can advise on the right MTD-compatible software for your situation, whether you’re starting from scratch or migrating existing records.

Our professional MTD support for businesses covers all aspects, from initial setup and accounting software migration to quarterly submission management, bookkeeping and more. If you’re an existing business client of Hamlyns, we will ensure that your MTD arrangements integrate seamlessly with your wider tax planning and accounting obligations, to ensure that you can fulfil your HMRC MTD requirements with confidence and peace of mind.

For sole traders, landlords and business owners who simply want the compliance handled in a way that doesn’t distract you from running your business, Hamlyns offers a fully managed MTD service.

Don’t wait for a reminder from HMRC. Get in touch with Hamlyns today to ensure you’re set up correctly for new and compliant MTD reporting.

Making Tax Digital FAQs

Does MTD apply to limited companies?: Not yet. MTD for Income Tax applies to sole traders and landlords. Currently, only VAT-registered limited companies must follow MTD for VAT, but MTD for ITSA does not apply to limited companies and corporations have separate rules. The government has, however, expressed an intent to include MTD rules for partnerships in the future.
What if my income fluctuates and I'm not sure whether I'm above the threshold?: Your qualifying income is based on your gross income from the previous tax year, so for example, your 2024/25 Self Assessment return for the April 2026 deadline. If that figure exceeds £50,000, you’re in scope. If your income later drops below the threshold, you may be able to apply to HMRC to exit MTD, but you cannot opt out pre-emptively.
What happens if there's no will?: When someone dies without a will (intestate), the law determines who inherits the estate. We can guide you through the intestacy rules and help you obtain Letters of Administration.
Do partnerships have to comply with MTD?: Yes but only if a partnership’s business income exceeds the relevant threshold, all partners must individually comply with MTD requirements. This is an area that often catches people out, so it’s worth reviewing your position sooner rather than later.
Are there any exemptions?: HMRC does allow exemptions in certain exceptional circumstances. These are assessed on a case-by-case basis. If you think you may qualify for an exemption, speak to us before assuming one applies.
What software do I need?: You’ll need software that is recognised by HMRC as MTD-compatible. This includes platforms such as Xero, QuickBooks and others on HMRC’s approved list. Spreadsheets alone are not sufficient unless used alongside bridging software. At Hamlyns, we’ll recommend the right solution based on how your business operates.
Will MTD change how much tax I pay?: No. MTD changes how and when you report, not the amount of tax you owe. Tax rates, allowances, and payment deadlines remain the same.

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