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Making Tax Digital – Frequently Asked Questions

What is Making Tax Digital (MTD)?

The UK government has long-term aspirations for a modern, digital, efficient tax system, which will minimise errors and make compliance easier. It calls the initiative Making Tax Digital (MTD) and it started in 2019 with implementation for VAT registered businesses.

It requires digital record keeping and online submissions.

The next phase is the implementation of Making Tax Digital for Income Tax (MTD IT, or MTD ITSA), from April 2026.

 

Who needs to comply with MTD?

All VAT registered businesses should already be complying with MTD for VAT.

Key dates for MTD IT are:

From April 2026, all individuals with income from self-employment and/or property rental, where total combined turnover was more than £50,000 in tax year 2024-25.

From April 2027, all individuals with income from self-employment and/or property rental, where total combined turnover is more than £30,000 in tax year 2025-26.

From April 2028, all individuals with income from self-employment and/or property rental, where total combined turnover is more than £20,000 in tax year 2026-27.

 

What does MTD involve?

The key elements for Making Tax Digital are:

  • Keeping digital tax records (no more receipts in carrier bags)
  • Submitting returns using MTD-compatible software

For MTD IT it also involves:

  • Submitting quarterly income & expenditure summaries to HMRC
  • Submitting a final yearend declaration (basically the self-assessment tax return)

 

Will tax payment deadlines change?

No. Payment dates remain the same as the current self-assessment requirements:

  • 31st January (main payment)
  • 31st July (payment on account, if applicable)

 

Are there exemptions from MTD?

Yes, there are some exemptions, either automatic or claimable, including:

  • Income below the threshold
  • Digital exclusion (age, disability, remote location)
  • Religious grounds
  • Trustees, foster carers, non-resident companies

Find out more about exclusions here: https://www.gov.uk/guidance/apply-for-an-exemption-from-making-tax-digital-for-income-tax

 

What are digital records?

This means using software that’s compatible with MTD IT to create and store records of income and expenditure. These records include:

  • Income and expenditure details for each trading and property businesses
  • For retail businesses it means recording daily gross takings

You can find guidance on compatible software here: https://www.gov.uk/guidance/find-software-thats-compatible-with-making-tax-digital-for-income-tax

 

How does HMRC determine if I meet the income threshold?

HMRC will look at all self-assessment tax returns filed for the 2024-25 tax year to identify those who need to follow the MTD rules from April 2026. They look at the specific boxes for self-employment and property income.

The earlier you submit your 2024-25 tax return, the sooner HMRC will be able to start communicating with you about your MTD obligations.

 

My accounting period is to 31st March, but the MTD period is to 5th April – does this matter?

No, this is absolutely fine. The deadlines for submitting quarterly updates are the same whether you use the standard tax year quarters or calendar quarters.

If using standard tax year quarters:

  • Q1: 6 Apr – 5 Jul → Due 7 Aug
  • Q2: 6 Jul – 5 Oct → Due 7 Nov
  • Q3: 6 Oct – 5 Jan → Due 7 Feb
  • Q4: 6 Jan – 5 Apr → Due 7 May

If using calendar quarters:

  • Q1: 1 Apr – 30 Jun → Due 7 Aug
  • Q2: 1 Jul – 30 Sep → Due 7 Nov
  • Q3: 1 Oct – 31 Dec → Due 7 Feb
  • Q4: 1 Jan – 31 Mar → Due 7 May

Note – if you want to use calendar quarters for your MTD submissions, you must opt-in when you enrol for MTD IT.

 

I’m a VAT registered sole trader and my VAT quarters do not match the MTD IT quarters. What can I do?

You don’t have to do anything, although this means you’ll have quarterly returns to do during 8 months instead of 4. You cannot change the submission dates for MTD IT but you can change your VAT quarters so they match. You might find it easier to manage 4 sets of deadlines insead of 8.

 

I have multiple self-employments – can I submit a quarterly return that includes figures for all of them?

No – you will have to make quarterly submissions for each separate self-employment/trade.

 

I am self-employed and also have income from property rental – can I submit a quarterly return that includes figures for both?

No – you will have to make quarterly submissions for each separate self-employment/trade and a separate return for your property.

 

I have multiple UK properties that I receive rental income from – will I need to submit a return for each property?

No – one submission can cover all UK properties. There are software products designed specifically for landlords, which allow you to manage your accounts for each property and will do a single combined MTD IT submission.

 

Do I have to use one piece of software to submit all MTD returns?

No – you can use different software e.g. one for property income and another for self-employed income.

 

If you’re not sure what this means for you and you’d like a free chat with absolutely no obligation, then you can book a call with me here: https://calendly.com/jq_bookkeeping/clarity-call

 

Updated November 2025

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