At A&C Chartered Accountants, we know tax can feel overwhelming—especially with new rules like Making Tax Digital for Income Tax (MTD for IT) coming into play from 6 April 2026. But don’t worry, we’re here to guide you through it, step by step.
Here are some of the most frequently asked questions to help you stay ahead:
Who will be affected, and when?
MTD for IT will apply to self-employed individuals and landlords with combined business and property income over certain thresholds. The rollout will be phased:
From 6 April 2026 – if your qualifying income is over £50,000 (based on 2024/25 tax year)
From 6 April 2027 – if it’s over £30,000 (based on 2025/26 tax year)
From 6 April 2028 – if it’s over £20,000 (based on 2026/27 tax year)
If you cross the threshold, HMRC will notify you when you’re required to comply.
What counts as ‘qualifying income’?
Qualifying income is your gross income (before expenses) from self-employment and property combined.
It’s important to know that HMRC uses the income figures from your tax return. If you’re using the Cash Basis and include VAT in your income, that VAT will count towards your qualifying income. So it’s usually best to submit VAT-exclusive figures to avoid accidentally tipping over the threshold.
Are small businesses with few transactions exempt?
Unfortunately, no exemptions apply based on the number of transactions. If your qualifying income is over the threshold, you’ll need to comply—even if you only have a few invoices a year.
What will I need to do?
Once you’re mandated under MTD for IT, you’ll need to:
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Keep digital records in MTD-compatible software
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Submit quarterly updates to HMRC with summaries of your income and expenses
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Submit an annual finalisation (end-of-year return), including any other income like employment, savings or dividends
Both the quarterly updates and final return will need to be submitted via MTD-compatible software.
Do I have to make quarterly tax payments?
No. You’ll still pay tax the usual way:
I’ve heard there’s an easement for businesses under £90,000 turnover—what’s that about?
Yes, but it’s a bit limited. This easement lets businesses with turnover below the VAT threshold (£90,000) submit just total income and total expenses each quarter instead of a detailed breakdown by category.
You’ll still need to record every individual transaction in your software—it’s just the reporting categories that are simplified.
What if I own a property jointly with someone else?
Good news. If your property income is under £90,000, there’s an easement that lets you report a single income figure each quarter and a single total expense figure in the fourth quarter for jointly held property.
However, you’ll still need to separately record and report any residential property finance costs (such as mortgage interest).
I already file VAT returns quarterly—will these deadlines align?
Not always. MTD for IT quarters end on 5 July, 5 October, 5 January and 5 April. But you can opt to use calendar quarters (30 June, 30 September, 31 December, 31 March) if that’s easier.
If your VAT quarters don’t match, it might be worth adjusting your VAT stagger so both VAT and MTD for IT updates align, making life simpler.
What happens if I don’t comply?
HMRC are introducing a new penalty regime for late filing and late payment once MTD for IT kicks in.
Possible penalties include:
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Fines for missing quarterly updates or final returns
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Up to £3,000 per quarter if you don’t keep digital records (HMRC haven’t yet confirmed exactly how this will be enforced)
Penalties for errors will apply to the end-of-year return. While there’s no penalty for errors in the quarterly updates, it’s still vital to keep records accurate and up to date.
How A&C Chartered Accountants can help
We’re not just here to keep you compliant—we’re here to make tax simpler and less stressful for you. Whether you’re a sole trader, landlord, or both, we’ll help you:
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Choose the right MTD-compatible software
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Set up your digital record-keeping
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Stay on top of deadlines and reporting
Don’t wait until 2026 to get ready—let’s plan ahead together.
Call A&C Chartered Accountants today for a friendly chat or to book your MTD readiness review.