If you’re self-employed or earn rental income, there’s an important change coming to how you report your taxes. From 6 April 2026, the UK government’s Making Tax Digital (MTD) for Income Tax Self-Assessment rules will apply to anyone with qualifying income over £50,000 for the 2024–25 tax year.
Making Tax Digital is a major step in modernising tax reporting, but with preparation, it can simplify your accounting in the long run. Start early, choose the right software, and keep your digital records organised to make the transition smooth.
Even if your income is currently below £50,000, considering digital record-keeping now will make future compliance much easier.
What This Means
Under the new rules:
- You must keep digital records of your income and expenses.
- You must use HMRC-compatible software to report your income digitally.
- Manual submissions on paper will no longer be accepted for qualifying taxpayers.
This is designed to make tax reporting more accurate, timely, and efficient—but it does require preparation.
Who Is Affected
- Self-employed individuals with income over £50,000.
- Landlords or property owners with rental income above £50,000.
- The threshold is calculated based on total income, including both self-employment and rental earnings.
Practical Tips for Transition
- Check Your Income
- Review your total income for the 2024–25 tax year. If it exceeds £50,000, MTD will apply from April 2026.
- Choose the Right Software
- HMRC publishes a list of compatible accounting software. Look for options that suit your business size and complexity.
- Examples include Xero, QuickBooks, FreeAgent, or GoSimpleTax.
- Digitise Your Records
- Start recording invoices, receipts, and expenses digitally.
- Avoid spreadsheets that aren’t compatible with MTD software.
- Get Organised Early
- Set up a dedicated system for capturing all business and rental income.
- Reconcile your records monthly to reduce stress during submission periods.
- Plan for Deadlines
- MTD reporting is quarterly, so familiarise yourself with digital submission cycles and deadlines.
- Keeping up-to-date avoids penalties and last-minute rushes.
- Seek Professional Advice
- If you’re unsure how to transition, consult an accountant experienced with MTD.
- They can guide software choice, data migration, and compliance.
Where to Find Help and Support
Transitioning to Making Tax Digital can feel daunting, but there is plenty of guidance available. HMRC provides detailed resources on digital record-keeping, compatible software, and reporting requirements for self-assessment and rental income. Many accounting software providers also offer tutorials and support for MTD compliance.
It’s also a good idea to speak directly with your bookkeeper or accountant. They can review your current systems, advise whether you are on track, and help set up processes to ensure a smooth transition. Starting these conversations early will give you confidence that your records and reporting will meet HMRC requirements when MTD becomes mandatory in April 2026.