🍦MTD for Income Tax: Big Changes Coming in 2026 – Are You Ready?

Hey friend —

If you’re a self-employed business owner or landlord in the UK, you’ve probably heard about Making Tax Digital for Income Tax Self Assessment (MTD for ITSA). But what does it actually mean for you? And, more importantly, how will it change the way you report your income to HMRC?

What’s Changing?

From April 2026, the way certain taxpayers submit their income tax information to HMRC is going digital. Instead of filing a Self Assessment tax return once a year, affected individuals will need to:

📅 Keep digital records of income and expenses
📤 Send quarterly updates to HMRC using MTD-compatible software
📊 Submit a final declaration to confirm tax liability for the year

This change is designed to make tax reporting more efficient, accurate, and up to date – but it does mean a shift in how you manage your tax affairs.

Who Will Be Affected?

MTD for ITSA will apply to:

✅ Self-employed business owners and landlords with a total income of £50,000 or more from April 2026
✅ Those earning £30,000 or more from April 2027

If your income falls below £30,000, you won’t have to join MTD for ITSA just yet – though HMRC may extend it to more taxpayers in the future. It’s rumoured that £20,000 will be the threshold from April 2028 but this is yet to be confirmed.

❌ If you’re already using Making Tax Digital for VAT, this won’t directly impact your VAT returns, but you may still need to adjust how you report income tax.

What Do You Need to Do?

If you’ll be affected by the changes, it’s worth preparing now so it’s not a last-minute rush. Here’s how:

🖥️ Check your income levels – If your total self-employed and/or rental income is over £50,000, MTD for ITSA applies from April 2026. The period this applies to is based on the 2024/25 tax return (April 2024 to March 2025, so this current tax year we’re in right now!)

📊 Start using MTD-compatible software – HMRC-approved accounting software will be essential for submitting quarterly updates. If you’re already using digital tools, check they support MTD for ITSA. If you’re using Xero, Dext, Quickbooks, FreeAgent, Coconut, etc. then all of these are ready for MTD for ITSA. We will be recommending a mixture of Xero and/or Dext.

📝 Get comfortable with digital record-keeping – If you still rely on spreadsheets or paper records, now’s the time to switch to a digital system.

👩‍💻 Speak to your accountant – If you’re unsure how this will affect you, or need help choosing the right software, an accountant can help you prepare smoothly.

Final Thoughts

We know that change can feel daunting, especially when it comes to tax! But getting ahead of the curve will help you avoid stress and potential penalties. The good news? Digital tax reporting can actually make life easier, giving you a clearer view of your finances throughout the year and removing some of the last minute stress of putting gathering your records together at the end of the year.

If you need help getting set up for Making Tax Digital, or have questions about what it means for your business, we’re here to help! Get in touch, and let’s make tax simple together.

Need help managing the numbers so you can focus on what matters most? At Cone Accounting, we’re here to support your journey. Let’s make 2025 your best year yet.

Written and edited by Ben Nacca