Imagine running your own business, knowing exactly how your finances look in real-time—no surprises, no scrambling at year-end. Instead, you’re confident, organised, and ahead of the tax game. Welcome to Making Tax Digital for Income Tax (MTD for IT), the government’s upcoming revolution in tax reporting for the self-employed.
What Exactly is Making Tax Digital (MTD) for Income Tax?
Making Tax Digital for Income Tax is HMRC’s ambitious plan to shift self-employed individuals onto digital tax reporting. Under MTD, you’ll keep digital records of your income and expenses and submit quarterly updates to HMRC. This approach replaces the traditional annual tax return with more manageable updates throughout the year.
Who is Affected and When?
MTD for IT isn’t rolling out to everyone at once. The transition occurs gradually based on your turnover:
| Tax Year | Turnover Threshold | Who’s Affected? |
|---|---|---|
| 2026/27 | £50,000+ (in 2024/25) | Self-employed & landlords |
| 2027/28 | £30,000+ (in 2025/26) | Additional self-employed & landlords |
If your self-employment income meets or exceeds these thresholds, the changes apply to you.
Watch This: Making Tax Digital Explained (in under 3 minutes)
To understand exactly what MTD means for your business, watch this helpful video from HMRC:
Why Should the Self-Employed Care?
At its heart, MTD isn’t just about compliance—it’s about giving you greater clarity and control over your business finances. By updating records quarterly, you’ll have instant visibility on profits, expenses, and potential tax liabilities. Plus, when the tax year ends, your final tax return becomes simpler and quicker to complete.
Practical Benefits for Your Business:
- Accuracy: Real-time digital records reduce costly mistakes.
- Efficiency: No more annual chaos; filing becomes easier.
- Clarity: Better financial insights lead to smarter business decisions.
How to Get Ready Now:
If you’re self-employed, preparation is key:
- Evaluate your turnover: Check if your income puts you in line for early adoption (turnover of £50,000 or more in 2024/25, or £30,000 in 2025/26).
- Select HMRC-compatible software: Start familiarising yourself now.
- Go digital early: Begin digitising records today, and avoid last-minute stress.
Start Now, Save Time Later
The shift to Making Tax Digital might feel daunting, but early action simplifies your journey. It’s like learning to navigate a new route: the earlier you familiarise yourself, the smoother your travels become.
Want personalised guidance for MTD readiness? Contact Wainwrights Accountants today—we’re here to make your digital journey effortless.
