From April 2026, many self-employed individuals and landlords will be filing tax returns four times a year instead of once. This isn’t optional, it’s part of the next stage of Making Tax Digital (MTD), a government initiative aiming to modernise how tax works in the UK.
It’s a big shift, and if your income is above £50,000, it will apply to you.
What’s Making Tax Digital About?
MTD is HMRC’s way of tightening up how income is reported. Too many tax records go missing or are entered incorrectly, costing the Treasury billions. Their answer is to move everyone onto regular digital bookkeeping and reporting.
Who Will It Affect?
Starting April 2026, MTD for ITSA applies to:
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Self-employed people earning over £50,000
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Landlords with rental income above £50,000
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Or a combination of the two, with total earnings over £50,000 In 2027, the threshold drops to £30,000.
What’s Changing in Practice?
Here’s what MTD will require:
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Quarterly updates: Send income and expenses to HMRC every three months
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End-of-Period Statement (EOPS): One for each business or property
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Final Declaration: Replaces your current annual tax return
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MTD-approved software: No more spreadsheets, unless they connect to your software via digital links
Think of it like switching from keeping receipts in a drawer to using a proper accounting
app. It’s more structured and gives you better visibility.
“We see a lot of people who’ve never touched accounting software. They’re in for a rude awakening if they don’t adapt soon,” says Ian Luke, Partner at Accounting People.
Why the Move to Digital Makes Sense
HMRC’s push for Making Tax Digital is ultimately about creating a simpler, more reliable tax system. While the shift may feel daunting at first, digital tools can reduce mistakes, improve organisation, and give you a clearer picture of your finances throughout the year.
Why It’s Worth Preparing Early
Waiting until 2026 is risky. Here’s why it makes sense to start getting ready now:
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No last-minute stress: learning new systems takes time
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Better cash flow control: regular reporting can help you spot issues early
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Fewer surprises: if you know your tax position quarterly, year-end is smoother
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Less admin down the line: software can automate what you’re doing manually
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Fewer penalties: staying on top of things means you’re less likely to get fined
If you’re still working off memory or paper records, MTD will feel like switching from hand
tools to power tools. The process becomes quicker but only if you get used to the gear.
Steps You Can Take in 2025
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Check your total income — if you’re near the £50k mark, assume you’re in.
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Look into bookkeeping software — many are simple and HMRC-approved.
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Start logging your expenses digitally — even just on a basic app.
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Speak to your accountant — they can show you the most efficient way to comply. If you’re new to this or haven’t chosen an accountant yet, a free consultation might help clarify things.
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Consider voluntary sign-up — get used to the system before it becomes mandatory.
“Clients who’ve already moved to MTD are surprised how much easier tax feels. It’s more
proactive — and less stressful,” says Rashid Iqbal, Partner at Accounting People.
Don’t Get Caught Out
The way tax works is changing. You can treat MTD as another admin burden or as a chance to sort out your systems, track your finances better, and save time in the long run.
“Clients who have transitioned from paper-based, manual bookkeeping to digital, automated, bank-fed software are delighted by how much time it saves them. They now have a snapshot of their business at their fingertips, anytime” says Sohaib Naveed, Practice Manager at Accounting People.
About the Author:
Accounting People Ltd are a firm of Chartered Certified Accountants based in Stanmore, London. Serving clients across the UK, they specialise in digital tax solutions, cloud accounting, and proactive business tax advisory services.
Visit accountingpeople.co.uk for more insights and a free MTD-readiness consultation.
