Making Tax Digital for Income Tax
A Complete Guide for Sole Traders & Landlords
Making Tax Digital (MTD) for Income Tax is one of the biggest changes to personal tax reporting in recent years.
Up until now, most self-employed individuals and landlords have submitted one tax return per year. From April 2026, that begins to change.
Instead of one annual submission, many people will be required to:
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Keep digital records throughout the year
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Submit updates to HMRC every quarter
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Then complete a final year-end declaration
This doesn’t change how much tax you pay or when you pay it — but it does change how and when you report your income.
And importantly:
You will not be moved into this automatically — you will need to register.
Watch Our Full Overview
If you prefer to watch rather than read, we’ve created a full walkthrough explaining exactly what Making Tax Digital means, what you need to do, and how we can support you.
Who Does This Apply To?
MTD for Income Tax applies to individuals who earn income from:
• Self-employment (sole traders)
• Property (landlords)
The key factor is your total income (turnover), not profit.
Who Does This NOT Apply To?
This is where many clients get confused, so to be clear — MTD does not apply to:
• Employees only (PAYE) – no business or property income
• Limited companies – still covered by Corporation Tax (not MTD ITSA)
• Partnerships – not included yet
• Those earning £20,000 or less from business/property
• Income from dividends, pensions, savings, or employment
When Does It Apply to You?
MTD is being introduced in stages, based on your level of income.
From April 2026
You will be required to follow MTD rules from 6 April 2026 if:
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Your total income from self-employment and/or property exceeded £50,000
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Based on your 2024/25 tax return
Example:
If your combined turnover from business and/or rental income was over £50,000 in the tax year ending 5 April 2025, you will need to start MTD from April 2026.
From April 2027
The threshold then reduces:
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If your income is over £30,000 (based on your 2025/26 tax return)
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You will join MTD from April 2027
From April 2028
The threshold then reduces:
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If your income is over £20,000 (based on your 2026-27 tax return)
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You will join MTD from April 2028
What Will You Actually Need To Do?
Once you are within MTD, your responsibilities change.
Rather than one annual return, you will need to:
1. Keep Digital Records
You must maintain records of your income and expenses in a digital format (spreadsheet or software).
2. Submit Quarterly Updates
Every 3 months, you will send HMRC a summary of:
• Income
• Expenses
These are not full tax returns — but they are mandatory.
3. Submit a Final Declaration
At the end of the tax year, you will complete a Final Declaration.
This is the most important step in the MTD process, as it is the point where everything is brought together and confirmed.
In many ways, this replaces your current Self Assessment tax return.
The Final Declaration will include:
• Your finalised income and expenses for the year (based on the four quarterly updates)
• Any adjustments or corrections needed
• All other income not included in the quarterly updates, such as employment income, dividends, bank interest or pensions
________________________________________
While the quarterly updates provide HMRC with information during the year, they are not final and do not determine your tax position.
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The Final Declaration is where your full and accurate tax position is calculated
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And importantly, this process replaces the need to complete and submit a traditional Self Assessment tax return
Deadlines (How Quarterly Reporting Works)
Under MTD, you will submit 4 quarterly updates each year. Each update covers a 3-month period and is due shortly after the period ends.
Standard (Tax Year) Quarters
By default, HMRC works to tax year quarters:
You Have a Choice: Tax Dates vs Month-End Dates
You are not locked into the tax year dates — you can choose to align your quarters to calendar month ends, which is often simpler.
Option 1 – Tax Year Quarters (Default)
• Based on 5th of the month (HMRC tax dates)
• Can feel slightly less intuitive for record-keeping
Option 2 – Calendar Month Quarters (Recommended for Most)
You can instead use:
• 1 April – 30 June
• 1 July – 30 September
• 1 October – 31 December
• 1 January – 31 March
These are much easier to manage alongside bank statements and bookkeeping.
Why Month-End Reporting Is Often Better
If you choose month-end quarters:
• Your records naturally align with bank statements and software
• You avoid working to unusual dates like the 5th
• And importantly…
You effectively gain up to 5 extra days to prepare your submission
This is because:
• Your quarter ends on the last day of the month
• But the deadline is still the 7th of the following month
In Simple Terms
• You submit 4 updates per year
• Each one is due by the 7th of the following month
• You can choose:
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HMRC tax dates (5th)
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Or simpler month-end dates (recommended)
Making Tax Digital – A Visual Guide
How Should You Keep Your Records?
This is where most clients need guidance — and where we can add the most value.
There are three main approaches, and the right one depends on you.
Option 1 – Spreadsheets (Simple & Effective)
For clients with relatively straightforward finances, spreadsheets are still a perfectly valid option.
This is ideal if:
• You have a small number of transactions
• You are comfortable using Excel
• You want to keep things simple and cost-effective
To comply with MTD:
• The spreadsheet must be structured correctly
• It must link to HMRC via bridging software (such as VitalTax)
How We Can Support You?
We can support you at whatever level you need, depending on how involved you’d like to be.
This includes:
• Providing ready-made spreadsheet templates
• Helping you set up clear, structured digital records
• Reviewing your records to ensure they are MTD-compliant
• Supporting or handling submissions through bridging software (such as VitalTax)
For clients who would prefer a more hands-off approach, we can also:
• Prepare and manage everything for you, from records through to submission. This would be a higher level of support and would be quoted separately based on your needs.
Option 2 – Accounting Software
Many clients will benefit from using cloud accounting software, particularly as MTD moves towards more regular reporting.
You may already be using a system such as:
• QuickBooks
• Xero
• Sage
• Or another cloud-based accounting platform
These systems allow you to:
• Automatically track income and expenses
• Connect directly to your bank
• Maintain digital records in line with MTD requirements
• Submit updates to HMRC more seamlessly
We are direct partners with QuickBooks, Xero and Sage, and while we can work with other systems, these are the platforms we know best and can support most effectively.
If You’re Already Using Software
If you are already using cloud software, this is a great starting point.
We can:
• Review your existing setup
• Ensure your bookkeeping is structured correctly for MTD
• Make any necessary adjustments
• Support or handle your quarterly MTD submissions
In many cases, if we already support your VAT returns, this process will feel very familiar — and we may already be doing something similar for you.
If You’re Not Yet Using Software (or Want to Change)
MTD is also a good opportunity to review whether your current system is right for you.
You may decide to:
• Move from spreadsheets into software
• Switch between providers
• Upgrade to a more efficient solution
If that’s the case, we can:
• Have a consultation with you
• Understand your business and preferences
• Recommend the most suitable system for your needs
• Support you with setup and transition
Whichever route you take, we can support you in setting up, maintaining, and submitting your records in line with MTD requirements.
Option 3 – Considering a Limited Company
For some clients, this is a good point to step back and ask:
Is remaining self-employed still the right structure for you?
While MTD is a reporting change, it can naturally prompt a wider conversation about how your business is set up.
Why Some Clients Consider Going Limited
Moving to a limited company can offer a number of potential benefits:
• Limited liability protection – your personal assets are generally protected
• No MTD for Income Tax – companies are not currently required to submit quarterly MTD updates
• Different tax structure – income is taken through salary and dividends rather than being taxed entirely as personal income
• Potential tax efficiencies depending on profit levels and how you draw income
But It’s Not Right for Everyone
A limited company also brings additional responsibilities and administration, including:
• Annual company accounts
• Corporation Tax returns
• Companies House filings
• More structured record-keeping and compliance requirements
The Key Point
This isn’t simply about avoiding MTD.
For some clients, staying self-employed and adopting a simple system (such as spreadsheets or software) will be the most efficient and cost-effective route.
For others, moving to a limited company may be a very sensible next step.
How We Can Help
We can:
• Talk through your current position
• Compare both options in your specific situation
• Help you understand the tax, admin, and long-term implications
If this is something you’re considering, we’d recommend a short consultation to explore what’s right for you.
What happens if you don’t verify?
The consequences of not verifying are serious. You will not be able to file your company’s confirmation statement, and new director appointments could be rejected. Over time, this could lead to fines, disqualification, or even the company being struck off the register.
How Wyatt & Co can help
We’re in the process of registering as an Authorised Corporate Service Provider (ACSP) so that we can carry out identity verification for our clients.
We’ll be offering:
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A DIY support option – step-by-step guidance if you’d prefer to use GOV.UK One Login yourself.
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A managed service – where we verify your identity, link your code to your company records, and keep everything compliant.
Other firms are charging between £45–£250 per person for this service. We’ll be setting a clear and competitive fee so you know exactly what to expect.
Your Step-by-Step Plan
To make this as straightforward as possible, here is the journey we recommend — along with how we can support you at each stage.
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Step 1 – Understand if You’re Affected
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Step 2 – Register for MTD
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Step 3 – Choose Your Record-Keeping Method
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Step 4 – Get Fully Set Up
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Step 5 – Plan Your Deadlines
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Step 6 – Ongoing Support
Step 1 – Understand if You’re Affected
The first step is simply understanding whether MTD applies to you, and if so, when.
We can:
• Review your income
• Confirm whether you fall within the thresholds
• Clarify exactly when you will need to start
Step 2 – Register for MTD
This is a key step.
⚠️ You must register — it does not happen automatically
We can support you by:
• Registering you for MTD on your behalf
• Ensuring everything is correctly set up with HMRC
For some clients, this may also involve:
• Setting up or recovering your Government Gateway account
• Helping you access and manage your HMRC login
If you don’t currently have access or are unsure, we can guide you through this.
Step 3 – Choose Your Record-Keeping Method
You will need to decide how you are going to keep your records going forward.
This could be:
• Spreadsheet + bridging software
• Cloud accounting software
• Or considering a structural change (e.g. limited company)
We can support you by:
• Talk through your options with you
• Understand your preferences and level of involvement
• Signpost you to the most suitable approach for your situation
Step 4 – Get Fully Set Up
Once a direction is chosen, the next step is getting everything in place.
This includes:
• Setting up your chosen system (spreadsheet or software)
• Ensuring it is correctly linked to HMRC
• Putting simple processes in place for ongoing record-keeping
At this stage, we will also agree:
What level of support you would like from us going forward
This could range from light-touch support through to a more hands-on service.
Step 5 – Plan Your Deadlines
We will help you:
• Set out your quarterly reporting schedule
• Align your reporting periods (e.g. month-end vs tax dates)
• Put reminders and processes in place
The aim is to ensure everything runs smoothly and nothing is missed.
Step 6 – Ongoing Support
This is entirely flexible and tailored to you.
Depending on your needs, we can support in a number of ways:
• Registration support (if not already completed)
• Spreadsheet users
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You maintain your records
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We review, adjust where needed, and submit on your behalf
• Software users (QuickBooks, Xero, Sage, etc.)
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We review your bookkeeping
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Make any necessary adjustments
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Submit your quarterly updates
• More hands-on support
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We can take a more active role in maintaining records and managing submissions
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This would be agreed and quoted based on your requirements
The level of support is entirely up to you — from guidance through to full management.
How We Can Support You
We can support you with:
• Understanding your position
• Registering for MTD
• Choosing the right system
• Getting fully set up
• Managing submissions and ongoing compliance
Whether you want full support or just the right structure and guidance, we’ll tailor this to you.