Introduction
The UK tax system is undergoing a major transformation.
From 6 April 2026, thousands of individuals and businesses will be required to follow new rules under Making Tax Digital (MTD) for Income Tax.
This is not just a change in how you file your tax return
it is a complete shift towards real-time, digital tax management.
If you are self-employed or a landlord, this change will directly affect you.
Who Will Be Affected from April 2026?
Under the new rules:
- Individuals with qualifying income over £50,000 in the 2024/25 tax year
Must comply from 6 April 2026 - Individuals with income over £30,000 in the 2025/26 tax year
Must comply from 6 April 2027
Over time, even lower-income groups (from £20,000) are expected to be included.
What Is Making Tax Digital for Income Tax?
Making Tax Digital (MTD) requires you to:
1. Keep Digital Records
You must maintain your business income and expenses using compatible software.
2. Submit Quarterly Updates
Instead of one annual submission:
You will send 4 updates per year to HM Revenue & Customs.
3. Final End-of-Year Submission
At the end of the tax year:
You must confirm and finalise your tax position.
Why This Is a Big Change
1. From Annual to Quarterly Reporting
Previously:
- One Self Assessment per year
Now:
- 4 quarterly reports + 1 final submission
This increases the need for ongoing record-keeping and organisation.
2. Mandatory Use of Software
Spreadsheets alone will not be enough.
You must use MTD-compatible accounting software.
3. Real-Time Tax Visibility
The benefit:
- Better tracking of income and expenses
- Clear view of tax liabilities
- Improved financial planning
Tax becomes more predictable and manageable.
4. Penalties for Non-Compliance
The rules are mandatory.
Failure to comply can result in:
- Penalties
- Missed deadlines
- Compliance issues
What You Need to Do Now
1. Check If You Are Affected
- Review your income for 2024/25
- Identify if you cross the £50,000 threshold
2. Get the Right Software
Choose software that:
- Is MTD-compatible
- Tracks income and expenses
- Allows quarterly submissions
This is essential for compliance.
3. Get into a Quarterly Mindset
You will need to:
- Keep records updated regularly
- Submit reports every 3 months
Organisation will be key.
4. Understand Exemptions
Some individuals may be exempt due to:
- Age
- Disability
- Religious beliefs
- Digital exclusion
It is important to check your eligibility.
5. Decide How You Want to Manage It
You have options:
- Handle bookkeeping yourself
- Or outsource to professionals
The right choice depends on your time and expertise.
How Legacy Accounting Helps You Prepare
At Legacy Accounting, we simplify the transition to Making Tax Digital.
We help you:
- Identify your start date
- Set up MTD-compliant systems
- Manage quarterly submissions
- Stay fully compliant with HMRC
- Reduce stress and admin workload
We turn a complex process into a simple, structured system.
Common Mistakes to Avoid
1. Leaving It Too Late
Delaying preparation increases stress and risk.
2. Using Incorrect Software
Not all tools are MTD-compliant.
3. Poor Record-Keeping
Leads to errors and penalties.
4. Ignoring Quarterly Deadlines
Missing submissions can result in fines.
Preparation is key to a smooth transition.
Thinking About MTD? Start Preparing Now
The earlier you prepare, the easier the transition will be.
With the right systems and support, Making Tax Digital can actually improve:
- Efficiency
- Accuracy
- Financial control
FAQs
When does MTD for Income Tax start?
6 April 2026 for income over £50,000.
Do I need to submit tax returns more often?
Yes, quarterly updates plus a final annual submission.
Do I need new software?
Yes, MTD-compatible software is required.
Can I get help with MTD?
Yes, professional accountants can manage the process for you.
Final Thought
Making Tax Digital is not just a compliance requirement it is a transformation in how tax is managed.
Those who prepare early will benefit from better organisation, clearer finances, and fewer surprises.
Legacy Accounting helps you stay ahead of the change with clarity, confidence, and simplicity.
Call us on 01235 820000
Visit legacyaccounting.co.uk
Or message us directly for tailored advice
