Making Tax Digital (MTD) for Income Tax is one of the biggest changes to the UK tax system in recent years.
From April 2026, many self-employed individuals and landlords will be required to keep digital records and submit updates to HMRC using compatible software.
Who is affected?
From 6 April 2026, MTD for Income Tax applies to individuals with qualifying income above £50,000 from self-employment, property income, or a combination of both.
The threshold is expected to reduce further:
- £30,000 from April 2027
- £20,000 from April 2028
If your income is close to these thresholds, it is worth preparing now rather than waiting until the rules become mandatory.
What is Making Tax Digital?
Making Tax Digital is HMRC's initiative to modernise the tax system. Instead of relying solely on annual tax returns and paper records, taxpayers must keep digital records and use compatible software to communicate with HMRC.
The aim is to reduce errors, improve accuracy and make tax reporting more efficient throughout the year.
What records must be kept?
If MTD applies to you, you will need to maintain digital records of your business or property income and expenses.
Depending on your circumstances, records may include:
- Sales and income received
- Business expenses
- Property rental income
- Property expenses and maintenance costs
- Bank transactions
- Invoices and receipts
Paper records alone will no longer be sufficient once MTD applies to your income.
What information needs to be submitted?
Under Making Tax Digital, taxpayers will generally need to:
- Keep digital accounting records.
- Submit quarterly updates to HMRC.
- Complete an annual final declaration.
This means more regular interaction with HMRC compared to the traditional once-a-year Self Assessment process.
How can landlords prepare?
Landlords who currently manage rental records using spreadsheets or paper files should review their systems as soon as possible.
Moving to digital bookkeeping early can make the transition much smoother and reduce the risk of errors.
How can self-employed individuals prepare?
Self-employed individuals should ensure that income and expenses are recorded consistently throughout the year.
Using bookkeeping software can help automate much of the process and make quarterly reporting easier.
Why prepare now?
Many businesses and landlords still rely on manual bookkeeping methods. Preparing early gives you time to:
- Choose suitable software.
- Organise your records properly.
- Understand the new reporting requirements.
- Avoid last-minute compliance issues.
How Precision Books can help
Precision Books supports self-employed individuals, landlords and small businesses with bookkeeping, tax compliance and accounting services.
We can help you review your current processes, choose suitable software and ensure you are prepared for Making Tax Digital before the new requirements apply.
This article is for general information only and should not be treated as personal tax advice. Tax rules can change, so always check your own position before making decisions.