The UK tax landscape is undergoing one of its most significant transformations in decades. Making Tax Digital (MTD) for Self Assessment represents HMRC’s ambitious plan to digitise the tax system, and it will affect millions of self-employed individuals, freelancers, and landlords across the country. Whether you’re a sole trader running a small business or a property landlord managing rental income, understanding what MTD for Self Assessment means for you is no longer optional — it’s essential.
In this comprehensive guide, we’ll walk you through everything you need to know about Making Tax Digital for Self Assessment, including key dates, who is affected, what you need to do to prepare, and how professional support can make the transition seamless.
What Is Making Tax Digital?
Making Tax Digital is a government initiative designed to modernise the UK’s tax system. The programme requires taxpayers to keep digital records and submit tax information to HMRC using compatible software, rather than relying on traditional paper-based methods or manual submissions.
The initiative was first introduced for VAT-registered businesses in April 2019, and it has since been expanded. The next major phase — MTD for Income Tax Self Assessment (MTD for ITSA) — will bring millions more taxpayers into the digital fold.
HMRC’s vision is straightforward: by digitising tax reporting, errors will be reduced, tax collection will become more efficient, and taxpayers will have a clearer, real-time picture of their financial obligations throughout the year. While the long-term benefits are clear, the transition requires careful planning and preparation from those affected.
Who Will Be Affected?
MTD for Self Assessment will apply to individuals who earn income from self-employment or property (or both) above certain thresholds. The rollout is being phased based on income levels:
From April 2026: Self-employed individuals and landlords with a gross annual income of £50,000 or more will be required to comply with MTD for ITSA.
From April 2027: The threshold drops to include those with a gross annual income of £30,000 or more.
Future phases: HMRC has indicated that the programme may eventually extend to those earning below £30,000, as well as to partnerships and potentially other forms of income. However, specific dates and details for these later phases have yet to be confirmed.
It’s important to note that the income threshold refers to gross income — that is, total turnover or rental income before any expenses or deductions are taken into account. This means that even if your net profit is relatively modest, you may still fall within the scope of MTD if your total income exceeds the relevant threshold.
What Will MTD for Self Assessment Require?
Under the new rules, affected taxpayers will need to:
1. Keep Digital Records
You will be required to maintain digital records of all income and expenses related to your self-employment or property business. This means moving away from spreadsheets, paper receipts, and manual ledgers (unless your spreadsheet is linked to compatible software). Your records must be stored and maintained using HMRC-recognised MTD-compatible software.
2. Submit Quarterly Updates
Instead of filing a single annual Self Assessment tax return, you will need to submit quarterly updates to HMRC. These updates will summarise your income and expenses for each quarter of the tax year:
- Quarter 1: 6 April – 5 July
- Quarter 2: 6 July – 5 October
- Quarter 3: 6 October – 5 January
- Quarter 4: 6 January – 5 April
Each quarterly update must be submitted by the deadline falling one month after the end of the respective quarter.
3. Submit a Final Declaration
At the end of the tax year, you will still need to submit a final declaration — essentially replacing the traditional Self Assessment tax return. This declaration will confirm that the information provided throughout the year is complete and accurate, and it will also account for any additional income, reliefs, or allowances.
4. Use Compatible Software
All record-keeping and submissions must be done through MTD-compatible software. HMRC maintains a list of approved software providers, and many popular accounting platforms — such as Xero, QuickBooks, FreeAgent, and Sage — are already preparing or have prepared MTD-ready solutions.
How to Prepare for MTD for Self Assessment
Preparation is the key to a smooth transition. Here are the practical steps you should be taking now:
Review your income levels. Determine whether your gross income from self-employment or property will bring you within the scope of MTD from April 2026 or April 2027. Don’t wait until the last minute to check — understanding your position early gives you time to plan.
Choose your software. Research MTD-compatible software that suits your needs and budget. Consider factors such as ease of use, cost, integration with your bank accounts, and the level of support offered. If you’re already using accounting software, check with your provider to ensure it will be MTD-ready.
Digitise your records. Begin the process of moving your financial records into a digital format. If you’re still using paper-based systems, now is the time to transition. Start categorising your income and expenses digitally so that by the time MTD becomes mandatory for you, the process feels natural.
Understand the quarterly reporting cycle. Familiarise yourself with the quarterly submission dates and begin tracking your income and expenses on a quarterly basis, even before it becomes mandatory. This will help you identify any gaps in your record-keeping and build good habits.
Seek professional advice. The shift to MTD can be complex, particularly if you have multiple income streams, property portfolios, or unique business circumstances. Engaging with an experienced accountant early in the process can save you time, stress, and potentially costly mistakes.
The Benefits of Making Tax Digital
While the transition may seem daunting, MTD for Self Assessment does bring several tangible benefits:
- Greater accuracy:Â Digital record-keeping reduces the risk of manual errors, transposition mistakes, and lost paperwork.
- Real-time financial visibility: Quarterly reporting gives you a much clearer picture of your income, expenses, and tax liabilities throughout the year — no more nasty surprises when the January deadline arrives.
- Simplified compliance:Â Once your digital systems are set up, ongoing compliance becomes more streamlined and less time-consuming.
- Better financial planning:Â With up-to-date records and regular reporting, you can make more informed decisions about your business or property investments.
- Reduced penalties risk:Â Accurate, timely submissions help you avoid the penalties and interest charges associated with late or incorrect filings.
Common Concerns and Misconceptions
Many taxpayers have concerns about MTD, and it’s worth addressing some of the most common ones:
“I’m not tech-savvy.” Modern accounting software is designed to be user-friendly, even for those without a technical background. Many platforms offer tutorials, customer support, and intuitive interfaces that make digital record-keeping accessible to everyone.
“It will cost me more.” While there may be a cost associated with purchasing software, many affordable options exist — and some are even free for basic use. The time saved and errors avoided often offset the investment.
“I don’t earn enough to worry about this.” Even if you currently fall below the thresholds, HMRC’s long-term plan is to extend MTD further. Getting ahead of the curve now means less disruption later.
“My accountant handles everything.” Your accountant will still play a crucial role, but MTD requires ongoing digital record-keeping throughout the year, not just at year-end. Collaboration between you and your accountant will be more important than ever.
Let Mac&G Accounting Help You Navigate MTD with Confidence
If you’re a self-employed individual, freelancer, or landlord based in London, the transition to Making Tax Digital doesn’t have to be stressful. At Mac&G Accounting, we specialise in providing tailored accounting and bookkeeping services designed to help London-based professionals and business owners stay compliant, organised, and financially empowered.
Our experienced team understands the complexities of MTD for Self Assessment inside and out. From selecting and setting up the right software to managing your quarterly submissions and final declarations, we handle the details so you can focus on what you do best — running your business or managing your properties.
Whether you need full-service bookkeeping, Self Assessment tax return preparation, or simply guidance on getting MTD-ready, Mac&G Accounting is here to support you every step of the way. We pride ourselves on delivering a professional, personalised service that takes the burden of tax compliance off your shoulders.
Don’t wait until the deadlines are upon you. Get in touch with Mac&G Accounting today and let us help you make the transition to Making Tax Digital as smooth and stress-free as possible. Your peace of mind is just one conversation away.