Who is eligible for MTD?
MTD for Income Tax affects sole traders and landlords whose combined gross self-employment and/or property income exceeds HMRC’s phased thresholds: £50,000 from April 2026, £30,000 from April 2027, and £20,000 from April 2028.
89% of businesses keep their records on Excel and are submitting their tax manually via government gateway.
The government is introducing Making Tax Digital (MTD) as a simpler, more efficient way to file tax returns online.
What is Making Tax Digital for income tax?
- Keeps digital records of income and expenses
- Sends quarterly updates to HMRC using accountancy software (such as Xero)
- Submits a final declaration (similar to a tax return) by the usual deadline at the end of the tax year (31st January)
It should help reduce errors by using digital records, help give taxpayers more visibility and overall help to modernise the current tax system and minimise the administrative burdens. A key benefit to moving from Excel to e.g. Xero is that your business accounts are always up to date so you can see who owes you money.
When is this going to happen?
| Tax year | Income threshold | Must use MTD by… |
|---|---|---|
| 2026/2027 | £50,000+ | 6th April 2026 |
| 2027/2028 | £30,000+ | 6th April 2027 |
| 2028/2029 | £20,000+ | 6th April 2028 |
A change like this may seem daunting. But we can help you.
From this date, you will need to file quarterly tax returns rather than one annual return. Using our services can help make the transition seamless,
You shouldn’t panic. We have all the tools necessary for this transition to stop.
Using software such as Xero will make filing your returns much simpler for you to manage and review.
We are a Xero SILVER partner
