Making Tax Digital for Income Tax
Get MTD-ready without adding more to your workload.
Making Tax Digital changes how many sole traders and landlords keep records and report to HMRC. We’ll confirm when it applies to you, set up a practical FreeAgent process and support the required submissions throughout the year.
Quick start
Check your MTD readiness
Share your business type, records and current software setup.
MTD start-date checker
Check when MTD may apply to you.
This uses your combined gross self-employment and property income before expenses—not your profit.
This checker provides an indication, not a definitive determination. Exemptions, jointly owned property, ceased income sources, short accounting periods, residence status and other circumstances can affect the result. HMRC reviews qualifying income annually.
Who MTD affects
The rules depend on your income—not just the type of work you do.
Making Tax Digital for Income Tax applies to individuals registered for Self Assessment who receive qualifying income from self-employment, property or both. The date you must join depends on your gross qualifying income before expenses.
Sole traders
Your gross income from all of your sole-trader businesses is included when assessing whether you exceed the relevant threshold.
Landlords
Your qualifying share of gross property income is included, whether you have one rental property or a larger personally owned portfolio.
Sole traders who are also landlords
Your qualifying self-employment and property income is combined. You may therefore exceed the threshold even when neither source does so by itself.
Partnerships and limited companies
Partnership profit received in your capacity as an individual partner does not currently count towards qualifying income. Limited companies are not included within MTD for Income Tax, although separate digital requirements may apply for VAT.
What does “gross income” mean?
Gross income is the total income from your business or property before expenses are deducted—not the profit left after paying your costs.
For example, if your business receives £40,000 and has £15,000 of expenses, your gross income is £40,000—not the £25,000 profit. For MTD, qualifying self-employment and property income from different sources is generally combined.
When the rules begin
Over £50,000 qualifying income in 2024/25 — MTD applies from 6 April 2026
Over £30,000 qualifying income in 2025/26 — MTD applies from 6 April 2027
Over £20,000 qualifying income in 2026/27 — MTD applies from 6 April 2028
Salary, dividends, pensions and most other personal income do not count towards the MTD qualifying-income threshold.
What changes under MTD
One annual deadline becomes a year-round digital routine.
Making Tax Digital does not replace the need to complete your annual tax return. It introduces digital record keeping and quarterly updates during the year, using compatible software.
Keep digital records
Your business and property income and expenses must be recorded and preserved digitally using compatible software. This creates the information used for each quarterly update.
Send quarterly summaries
Every three months, the software totals the relevant income and expense categories for each self-employment or property business and sends a summary to HMRC. HMRC does not receive copies of every individual invoice or receipt.
Review an estimated tax position
After an update is submitted, you may be shown an estimated tax calculation. This can help indicate what is building up, but it is not necessarily the final amount and does not create a quarterly tax payment.
Complete the year-end tax return
After the final quarterly update, the records are checked, any necessary accounting and tax adjustments are made, and the remaining personal income is included before the annual tax return is submitted.
The aim is to keep the records moving throughout the year, rather than reconstructing everything when the tax-return deadline arrives.
How we help
We’ll set up the system and keep every submission on track.
MTD involves more than pressing a button four times a year. We’ll establish a workable record-keeping routine, check the information and manage the reporting process from setup through to the annual tax return.
Confirm when MTD applies
We’ll review your qualifying income, income sources and relevant tax years to confirm when you are expected to join and identify any circumstances that need further consideration.
Set up and authorise FreeAgent
We’ll create or configure your FreeAgent account, connect it to the relevant HMRC services and make sure the appropriate business and property records are kept separately.
Build a practical bookkeeping routine
We’ll help connect bank feeds and suitable integrations, explain what needs recording and agree who is responsible for each part of the bookkeeping.
Review the quarterly records
Before each update, we’ll review the information available, identify gaps or unusual items and ask for anything needed to bring the records up to date.
Prepare and submit quarterly updates
We’ll use the digital records to prepare the required summaries, submit them through compatible software and confirm when each update has been completed.
Complete the year-end work
After the final update, we’ll make the necessary adjustments, include your other relevant income and complete the annual tax return.
Keep future deadlines visible
We’ll remind you when information is needed, monitor the submission timetable and explain the actions or tax payments coming next.
One connected process—from the first digital record to the completed tax return.
FreeAgent and digital records
Keep the records moving without turning bookkeeping into a second job.
MTD requires digital records, but that does not mean every transaction needs to be entered by hand. We’ll configure FreeAgent and suitable integrations around how you receive income, pay expenses and manage your properties or business.
Bring bank activity into one place
Secure bank feeds import transactions into FreeAgent, reducing manual entry and making it easier to identify what still needs attention.
Capture receipts as you go
Upload or photograph receipts when costs arise, helping preserve the supporting information without relying on a year-end search through paperwork.
Create and track invoices
Sole traders can raise invoices, monitor what has been paid and follow outstanding amounts within the same system used for their accounting records.
Keep different income sources clear
Where you have more than one business or property-income source, we’ll help organise the records so the relevant quarterly information can be prepared correctly.
Share one current set of records
You and your Forest Finance accountant can work from the same information, allowing questions and missing items to be addressed throughout the year.
FreeAgent is included without a separate software charge in our ongoing MTD and accounting packages.
Getting ready for MTD
Start from where your records are now.
You do not need to arrive with perfect books or compatible software already in place. We’ll assess your current records, identify what needs changing and build the transition around the time available before your first update.
Currently using paper or spreadsheets?
We’ll help transfer the information into FreeAgent and establish a digital routine that meets the MTD requirements without making the process unnecessarily complicated.
Already using accounting software?
We’ll review the setup, confirm whether the records and software are suitable for MTD and correct any gaps before submissions begin.
Behind with your bookkeeping?
We’ll establish what is missing, agree a catch-up plan and bring the records to a reliable starting point before the first relevant update.
Approaching the income threshold?
We’ll monitor the qualifying income shown by your records and help you prepare in advance, rather than waiting for an HMRC letter or the first deadline.
Already required to use MTD?
If your start date has passed or a quarterly update is due, contact us as soon as possible. We’ll review what has happened and prioritise the steps needed to bring the position under control.
Early preparation gives you time to learn the routine before the reporting deadlines begin.
Your ongoing MTD routine
A simple cycle that keeps the year moving.
Once the setup is complete, the same routine repeats through the year. You keep the everyday information flowing; we review the records, manage the submissions and tell you what happens next.
1. Keep the records current
Use FreeAgent to raise invoices where relevant, connect bank transactions and capture receipts. If we provide your bookkeeping service, we’ll complete the agreed work using the information you supply.
2. Receive a quarterly reminder
Before each reporting point, we’ll remind you of anything that needs completing and explain when we need outstanding information.
3. Resolve the remaining questions
We’ll review the records, identify gaps or unusual items and send a clear request for anything needed before the update is prepared.
4. Submit the quarterly update
We’ll prepare and submit the required income-and-expense summary through compatible software, then confirm that the update has been completed.
5. Finalise the tax year
After the final quarterly update, we’ll review the full-year records, make the appropriate adjustments and complete your annual tax return with any other relevant income.
Regular records. Managed deadlines. No year-end reconstruction.
More than compliance
Turn a new reporting requirement into a clearer view of the year.
MTD creates additional responsibilities, but a well-run digital process can also replace the last-minute scramble with records that remain useful between deadlines.
Less pressure at year end
With income and expenses maintained throughout the year, there is less information to reconstruct when the annual tax return is prepared.
A clearer picture of performance
Current records make it easier to see what the business or property activity is earning, what it is costing and where something may need attention.
Earlier sight of tax
Quarterly estimates are not final calculations, but together with regularly reviewed records they can help you prepare for liabilities sooner.
Questions resolved while they are current
Missing information and unusual transactions can be addressed during the year, while the details are easier to find and remember.
A routine that can grow with you
A reliable digital process can accommodate additional income sources, properties or business activity without rebuilding the records from the beginning.
Compliance stays on track—and your figures become more useful along the way.
Making Tax Digital FAQs
Common questions about MTD for Income Tax
Is MTD based on my income or my profit?
It is based on qualifying gross income before expenses, not taxable profit. Broadly, this means the total income from self-employment and property before deducting the costs of earning it.
What if I have more than one business or rental property?
Qualifying income from your sole-trader businesses and property sources is generally combined when assessing the threshold. Once you join MTD, quarterly information must be maintained and reported for each relevant self-employment or property business.
Are quarterly updates the same as tax returns?
No. Quarterly updates are summaries of income and expenses produced from your digital records. Accounting and tax adjustments are normally dealt with after the final update, before the annual tax return is submitted.
Will I have to pay Income Tax every quarter?
The quarterly updates do not, by themselves, create quarterly tax payments. They may produce an estimated tax position, but your actual liability is finalised through the annual return and remains payable under the applicable Self Assessment deadlines.
Does HMRC receive every invoice and receipt?
No. The quarterly update contains totals for the relevant income and expense categories, not copies of each underlying transaction. You must still retain the digital records and supporting evidence.
Can I continue using spreadsheets?
Some spreadsheets may be used as part of an MTD-compatible system when they are connected to suitable bridging software. However, we normally recommend FreeAgent because it keeps the records, bank activity, supporting information and submissions within one more manageable process.
When are the quarterly updates due?
Under the standard timetable, the deadlines are 7 August, 7 November, 7 February and 7 May. We’ll confirm the periods that apply to you and remind you when information is needed.
What happens if there were no transactions during the quarter?
An update is still required. The submission tells HMRC that no income or expenses were recorded for the period.
Can Forest Finance complete the quarterly updates for me?
Yes. We can review the digital records, prepare the updates and submit them as your agent. You will still need to keep information flowing and respond to questions so the records remain complete.
Can someone be exempt from MTD?
In some circumstances, including certain cases of digital exclusion, an exemption may be available. Some exemptions are automatic and others must be requested from HMRC. We can help you understand the position, but HMRC decides whether an application is accepted.
Still unsure how the rules apply to you? Check your likely start date or talk it through with us.
MTD readiness check
Tell us where your digital records stand.
Tell us what you need explained about Making Tax Digital, software setup or digital record keeping.
MTD route
A clearer route for digital records and software readiness.
We can review your current records, software and deadlines, then recommend the right Making Tax Digital support.
- Share your business type, records and software position.
- Forest Finance checks your MTD readiness and deadline pressure.
- You receive a practical route for digital records, software or ongoing support.
Useful if you are unsure whether your records, software or submission process are ready for Making Tax Digital.
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