Does Making Tax Digital for Self Assessment Affect Me?

If you're self-employed or a landlord, you've probably heard the term "Making Tax Digital" (MTD) being mentioned more and more. It sounds official and slightly intimidating — but once you understand what it actually means, it's fairly straightforward.

What is MTD for Self Assessment?

Making Tax Digital for Income Tax Self Assessment (MTD for ITSA) is HMRC's move to modernise how self-employed people and landlords report their income. Instead of filing one Self Assessment tax return a year, you'll need to:

• Keep digital records of your income and expenses using approved software

• Submit a quarterly update to HMRC every three months

• Submit a final end-of-year declaration

The goal is to reduce errors and give HMRC (and you) a more up-to-date picture of your tax position throughout the year, rather than one big reconciliation at the end.

Does it affect me?

MTD for Self Assessment will apply based on your gross income from self-employment and/or property:

• If your qualifying income is over £50,000, you'll need to comply from April 2026

• If your qualifying income is between £30,000 and £50,000, you'll need to comply from April 2027

• HMRC has indicated it intends to bring the threshold down further to £20,000 in future years

If your income is below these thresholds, you can continue with the current Self Assessment system for now — but it's worth planning ahead, since the thresholds are expected to keep dropping.

What do I need to do to prepare?

1. Check your qualifying income — this is based on your self-employment and property income combined, not your profit

2. Choose MTD-compatible software — spreadsheets alone won't be enough; you'll need software that can submit updates digitally to HMRC (or a bridging tool)

3. Get comfortable with more regular record-keeping — waiting until January to sort your paperwork won't work under MTD

4. Speak to an accountant early — the transition is much smoother with support in place before your first quarterly deadline

The upside

While it's a change, MTD does have some genuine benefits: fewer surprises at year-end, better visibility of your tax position throughout the year, and less last-minute scrambling every January.

If you're not sure whether MTD applies to you yet, or want help getting set up with the right software and process, get in touch. This is exactly the kind of thing we help clients prepare for well ahead of the deadline.