With just over a year to go before Making Tax Digital for Income Tax (MTD for IT) becomes mandatory, now is the time to check whether your business will need to comply from 6 April 2026.
Who Needs to Comply?
If you are a sole trader or run an unincorporated property business, you’ll need to comply with MTD for IT if your qualifying income (generally turnover from your sole trade or property business) is £50,000 or more in the 2024/25 tax year.
While it’s too early to confirm your 2024/25 income, your 2023/24 self-assessment tax return can give you an indication. If your income was above or nearing £50,000, and you expect it to remain at that level or increase, you’ll likely be mandated into MTD from April 2026.
What is HMRC Doing?
HMRC will use 2023/24 tax returns (submitted by 31 January 2025) to identify affected taxpayers. In the coming months, they’ll be sending letters to those who are likely to be required to comply, explaining why they fall within the new rules.
What Does MTD for IT Involve?
If you are required to comply, you’ll need to:
- Keep digital accounting records using compatible software
- Submit quarterly digital reports to HMRC
For some, this will be a significant change, but it could also bring benefits, such as improved financial tracking and tax planning. We can do both of these requirements on your behalf as part of our annual accounting and bookkeeping services.
How We Can Help
If you receive a letter from HMRC or want to prepare early, we’re here to help. We can guide you in choosing the right software and setting up processes that make MTD compliance as smooth and beneficial as possible.
If you have any questions or want to get ahead of the changes, speak to our team today.