Making Tax Digital for Income Tax changes how affected sole traders and landlords maintain records and report information to HMRC.
Instead of preparing the business records only for an annual tax return, you must keep digital records in compatible software and send quarterly summaries of your income and expenses.
Who needs to use it?
You need to use Making Tax Digital for Income Tax if you are an individual registered for Self Assessment who receives income from self-employment, property or both, and your qualifying income is above the relevant threshold.
The introduction is being phased:
- Qualifying income over £50,000: from 6 April 2026
- Qualifying income over £30,000: from 6 April 2027
- Qualifying income over £20,000: from 6 April 2028
Qualifying income is broadly the gross income received from self-employment and property before expenses. If you have both, the relevant income is combined when checking the threshold.
Some people may be exempt or have circumstances that require a closer review. If you are near a threshold or unsure which income should be included, check your position rather than assuming the rules do not apply.
What changes?
If you are required to use Making Tax Digital for Income Tax, you will need to:
- Create and retain digital records of relevant income and expenses
- Use compatible software
- Send quarterly updates for each self-employment or property business
- Correct the records when errors are identified
- Complete and submit your tax return through the compatible software
Quarterly updates are summaries of the income and expense information recorded so far. They are not four separate tax returns, and tax and accounting adjustments are not generally required before each update.
You will still need to finalise your overall Income Tax position and submit your tax return after the end of the year.
How FreeAgent can help
FreeAgent can provide the compatible software needed to maintain the digital records and make the required submissions.
Bank feeds, invoicing and receipt-capture tools can help keep income and expenses moving into the records throughout the year. FreeAgent can then use the recorded information to prepare the quarterly updates and keep relevant deadlines visible.
Software makes the process easier to organise, but it does not guarantee that every transaction has been included or treated correctly. The records still need to be maintained, reviewed and corrected where necessary.
Where Forest Finance handles your Making Tax Digital submissions, we will agree which records you are responsible for maintaining, what we will review and when information needs to be ready.
What should you do now?
- Check the qualifying income shown on the relevant tax return
- Confirm when the rules apply to you
- Check whether an exemption may be relevant
- Choose compatible software
- Begin keeping the records current
- Agree responsibilities and submission arrangements with your accountant
You do not need to wait until the first quarterly deadline to prepare. Establishing the software and record-keeping routine early will make the transition easier.
Unsure whether you are affected?
Use the Forest Finance MTD checker for an initial indication or tell us about your self-employment and property income. We can help establish when the requirements apply and what needs to be put in place.
Relevant next steps:
Last reviewed: 2 September 2026