An update on Making Tax Digital

The government’s Making Tax Digital (MTD) initiative is expanding, and the next phase — Making Tax Digital for Income Tax Self Assessment (MTD for ITSA) is set to be implemented in April 2026, the beginning of the next tax year.

This change will affect how millions of self-employed individuals and landlords manage their tax affairs.

I am busy preparing our infrastructure for this transition now, to make sure everything is in place well before the deadline.

Who Will Be Affected

From April 2026, anyone with more than £50,000 in total annual income from self-employment and/or property will need to comply with the new MTD rules.

From April 2027, the threshold will drop to £30,000, meaning even more taxpayers will be included.

This applies to income from:

• Sole trader businesses

• Rental property (UK only — at this stage)

• A combination of the two

  
  

If your income is below £30,000, you can continue using the current Self Assessment system — for now.

This does not apply to those operating via a Limited Company or those who derive earnings from a Partnership (nor the Partnership itself), although these categories are in scope for future roll outs.

What Will Change

MTD for Income Tax means:

• Keeping digital records of income and expenses

• Sending quarterly updates to HMRC via approved software

• Filing an end-of-period statement and final declaration annually

This replaces the current annual Self Assessment return for those affected.

FreeAgent

To make this transition as smooth as possible, I am available to all clients in scope for MTD ITSA through FreeAgent, our chosen accounting software.

Freeagent is fully HMRC-compliant for MTD, geared towards the user not the Practitioner, is Cloud-based so you can access your books anywhere, and is free of charge for eligible NatWest, RBS and Mettle customers.

By way of a reminder I have no affiliation with Freeagent or this Banking Group.

However, offering one trusted platform allows me to provide consistent training, streamlined support, and better insights across all clients.

What to do

If you think you're in scope and would like my help in getting ready, or are unsure whether this applies to you, please do book in a chat with me here.

This is a major shift in how income tax works, but with the right tools and support, it can also be a chance to modernise your bookkeeping and gain more control over your business finances.

I'll be in touch with more updates, and don’t hesitate to get in touch if you'd like to know more.