Making Tax Digital (MTD) for Income Tax is HMRC’s move from “one tax return a year” to digital record-keeping with regular updates. It started in earnest in April 2026, and it arrives in waves — so the first question is simply whether your wave has come yet.
Who’s in, and when
The trigger is your qualifying income — broadly your total gross income from self-employment and property (turnover, not profit):
- Over £50,000 — you’re in the first wave, from April 2026
- Over £30,000 — your wave arrives in April 2027
- Over £20,000 — announced to follow from April 2028
- Below that — nothing required yet; thresholds and dates can evolve, so it’s a “watch this space” rather than a “panic now”
HMRC assesses this from the tax returns you’ve already filed, and writes to people as their wave approaches.
What actually changes
If MTD applies to you:
- Digital records — your income and expenses need to be recorded in MTD-compatible software, not a shoebox or a standalone spreadsheet.
- Quarterly updates — four times a year, the software sends HMRC a summary of income and expenses. Not a tax return, not a calculation — a summary, and if your records are up to date it’s close to a button-press.
- A final declaration — once a year, replacing the traditional Self Assessment return: you confirm the year’s figures, add anything else (other income, reliefs), and that produces the tax bill.
What doesn’t change
When you pay tax. The payment dates stay as they are — quarterly updates are information, not invoices. Anyone who’s told you MTD means paying tax four times a year has been misinformed.
The total tax you owe doesn’t change either. MTD changes the plumbing, not the price.
The calm way to prepare
Everything about MTD is painless if your bookkeeping is already digital and already current — and hard work if a year of receipts needs reconstructing every quarter. That’s the whole trick: little and often beats a January scramble.
Our clients are on Xero from day one with bookkeeping kept up to date through the year, so quarterly updates are a non-event rather than a new burden. If you’re staring at your turnover wondering which wave you’re in — or you’ve had the HMRC letter and would rather someone else dealt with it — we’re happy to talk it through.
This guide is general information, not advice for your specific circumstances. Tax rules change, and how they apply depends on your situation — if you'd like to talk yours through, we're happy to help.
Quick answers
Do I have to do anything about MTD right now?
It depends on your income. Self-employed people and landlords with qualifying income over £50,000 are in from April 2026; over £30,000 follows from April 2027. Below that, nothing is required yet — but keeping digital records early makes the eventual move painless.
Does MTD mean I pay tax quarterly?
No — that’s the biggest myth. The quarterly updates are summaries of your income and expenses, not tax bills. When tax is paid hasn’t changed.
Do I need special software for MTD?
You need MTD-compatible software to keep records and send updates — spreadsheets alone only work with extra bridging tools. Cloud bookkeeping software such as Xero handles it as standard; our clients are on it from day one.