The Spring Statement brought a key update for business owners and landlords: the Making Tax Digital for Income Tax (MTD for IT) regime is being extended yet again, this time to smaller businesses and landlords with lower income levels. If you fall into this category, here’s what you need to know – and how to prepare.
What is MTD for Income Tax?
MTD for Income Tax is part of HMRC’s broader Making Tax Digital programme, designed to modernise the UK tax system. It means:
- Keeping digital records of your income and expenses
- Submitting quarterly updates to HMRC using MTD-compatible software /li>
- Eventually, replacing your annual Self-Assessment return with a digital end-of-year submission
Think of it as moving from a once-a-year tax scramble to bite-sized updates throughout the year.
Who will be affected, and when?
This isn’t happening all at once. MTD for IT is being introduced in stages, based on how much income you earn from self-employment and/or property:
| Annual Income | Annual Income during tax year | MTD Applies From |
| Over £50,000 | 2024/25 | 6 April 2026 |
| Over £30,000 | 2025/26 | 6 April 2027 |
| Over £20,000 (NEW!) | 2026/27 | 6 April 2028 |
If your combined income from trading or property exceeds these thresholds, you’ll need to comply.
And yes – this means that from 2028, many smaller landlords and sole traders will be brought into the digital fold.
MTD for IT will also affect how tax returns are submitted
It has also now been confirmed that if you are required to use MTD for IT, your end-of-year tax return must also be submitted using MTD-compatible software. It won’t be possible to use a free HMRC online service.
What can you do?
This may be a big adjustment in the way you keep your accounting records. Please feel free to get in touch with Sara and the team, we would be happy to provide advice, recommendations and training, if needed, so that you can meet this new requirement with the minimum hassle and stress.
