Preparing for Making Tax Digital (MTD) for Income Tax
The UK tax system is undergoing a significant transformation with the introduction of Making Tax Digital for Income Tax Self Assessment (MTD for ITSA). This phased rollout begins from April 6, 2026, changing the way businesses submit their taxes.
What Is Changing?
Under the new rules, businesses will no longer file an annual Self Assessment tax return. Instead, they will be required to:
- Keep Digital Records: Maintain electronic records of all business transactions, including income and expenses.
- Submit Quarterly Updates: Provide quarterly updates to HMRC using MTD-compatible software.
- Submit a Final Declaration: Deliver a final declaration by January 31 following the end of the tax year to finalise your tax position.
Timeline of Implementation
Your start date for these changes depends on your “qualifying income” (the total gross income from self-employment and property combined):
- From April 6, 2026: Applicable if your qualifying income is over £50,000.
- From April 6, 2027: Applicable if your qualifying income is over £30,000.
- From April 6, 2028: Applicable if your qualifying income is over £20,000.
If you haven’t yet prepared for MTD and fall within the scope, contact us to get yourself ready – Contact ATS Accountants Manchester | 0161 818 4949
Immediate Steps to Take
- Check Your Income: We have assessed and confirmed your inclusion within the MTD scope.
- Choose Compatible Software: This has been arranged, and software is ready through our providers.
- Transition to Digital: If you currently use paper records, it’s time to move to a digital system. We’re here to assist you with this transition. Contact us – Contact ATS Accountants Manchester | 0161 818 4949
- Sign Engagement Letter: Please sign so we can act on your behalf and guide you through this process.
Example MTD Deadline Calendar
- Q1 Deadline: 07 August, 2026
- Q2 Deadline: 07 November, 2026
- Q3 Deadline: 07 February, 2027
- Q4 Deadline: 07 May, 2027
- Final Declaration: 31 January, 2028
Period Coverage:
- 06 April – 05 July, 2026
- 06 July – 05 October, 2026
- 06 October, 2026 – 05 January, 2027
- 05 January – 05 April, 2027
These changes replace the current annual tax return system and streamline your tax submission process. We’re here to support you through this transition. Please reach out to us if you have any questions or want to discuss the best options for your specific needs.
Here’s the link to HMRC’s page on MTD if you want to find out more specifics – Making Tax Digital for Income Tax – GOV.UK
You can also read our blog on how you can reduce your tax liability – Essential Tax Planning Tips for UK Businesses