With just one year to go now is the time to prepare for Making Tax Digital for income tax – are you ready?
Making Tax Digital (MTD) for Income Tax is set to go live on 6 April 2026, and it will mark a major shift for sole traders and landlords earning over £50,000 in qualifying income. With just under a year to go, we are encouraging all our clients to get ahead by understanding how these changes could affect them and starting preparation early.
Under MTD for Income Tax, eligible individuals will need to keep digital financial records and submit quarterly updates using HMRC-approved software. This move is part of a broader strategy to modernise the UK tax system and support long-term business growth.
Making Tax Digital for income tax – why it matters
Instead of rushing to complete annual tax returns, quarterly reporting will help spread the workload evenly across the year, giving businesses a clearer, real-time view of their tax position. This also makes financial planning easier and reduces the risk of last-minute errors or omissions.
As well as advising clients to take action on MTD early, and staying ahead of the curve, we are also working with our Financial Services Team to build a value added service that not only helps clients stay tax compliant but also adds value to their affairs reviewing their use of annual allowances, and any other additional tax and wealth planning opportunities that might arise. Tim Humphries, a Partner, and Tax partner at RPGCC, commented:
“We see Making Tax Digital for Income Tax as a valuable opportunity for businesses to bring their record-keeping up to date with the digital age. By shifting to a more modern system now, sole-traders and landlords can save valuable time, reduce tax errors, and gain greater visibility over their income and expenses throughout the year. We also see this as an opportunity to help our clients further. We are actively introducing them to our team of IFA’s who are working with our private clients to ensure they are all getting the most out of any available reliefs and wealth planning opportunities that might exist. For example, knowing your earnings during the course of the year will greatly assist with pension planning”
Tim added: “We’re advising our clients not to wait until the last minute. Signing up early to HMRC’s MTD pilot scheme and getting used to the software now offers a chance to learn the new process with support and without penalty, helping ensure a smooth transition next April.”
What you need to know about Making Tax Digital for income tax
From April 2026, anyone with more than £50,000 in combined income from self-employment and/or property will be required to:
- Keep digital records
- Use compatible software
- Submit quarterly summaries of income and expenses to HMRC
This requirement will extend to those earning over £30,000 in April 2027 and to those over £20,000 in April 2028.
The income threshold is based on gross income before deducting allowable expenses. Importantly, the transition to MTD will not replace Self-assessment entirely, but it will transform how and when data is submitted to HMRC.
Lessons learned from Making Tax Digital for VAT
HMRC’s experience with MTD for VAT, which now applies to over 2 million businesses, showed that those who joined the pilot phase were better prepared and reported fewer errors and improved time management. Early adopters of MTD for VAT also reported more confidence in their compliance processes.
A 2021 independent review found that nearly 70% of businesses saw at least one benefit from switching to MTD for VAT, such as reduced administrative effort and increased accuracy.
Making Tax Digital for Income Tax – How RPGCC can help you
At RPGCC, we are already working closely with clients to assess their readiness and implement the right tools and support. Our tax and digital teams are available to guide you through:
- Choosing and setting up MTD-compatible software
- Understanding your new reporting responsibilities
- Training and ongoing support to ensure compliance
With penalties for late submissions waived during the testing phase, now is the ideal time to try the system and iron out any issues well before the April 2026 deadline.
If you would like to read more about Making Tax Digital for income tax and how this might impact you, you can visit the HMRC website here.
If you’re unsure how MTD will impact your business, or want help preparing, get in touch with your RPGCC contact today.
