MTD to be made compulsory for millions of businesses and individuals
- TBA
- May 13
- 3 min read
Updated: May 29
As we move further into the digital age, many industries are gradually abandoning paper-heavy administrative processes in favour of streamlined, digital solutions.
HMRC first introduced the concept of Making Tax Digital (MTD) in 2015, with the aim of phasing out paper-based tax returns and shifting to digital submissions via approved software — ushering in a system of real-time tax.
What Is Making Tax Digital (MTD)?
Making Tax Digital (MTD) is a major tax modernisation initiative by the UK government, designed to:
Digitise and automate the tax filing process;
Minimise human error in tax reporting;
Improve overall system efficiency;
Encourage small businesses and the self-employed to embrace digital solutions.
The MTD rules apply to sole traders, landlords, companies, and businesses registered for VAT. The registration threshold is based on gross income or turnover, not net profit.
MTD to be made mandatory for millions
In her Spring Budget, Chancellor Rachel Reeves announced key adjustments to the MTD rollout. HMRC has since confirmed three major tax regulation changes that will impact millions of UK taxpayers — the first of which takes effect in April next year:
From 6 April 2026: Businesses, landlords and self-employed individuals with income over £50,000 must register for MTD.
From 6 April 2027: Landlords and self-employed individuals with income over £30,000 must register.
From 6 April 2028: Landlords and self-employed individuals with income over £20,000 must register.
Those who meet the criteria must:
Keep digital records;
Submit quarterly updates;
Use MTD-compatible software to send Income Tax Self Assessment (ITSA) data to HMRC.
Will you need to use digital ITSA submissions?
From 6 April 2026, digital income tax filing will be rolled out in phases. You can choose to register voluntarily now to prepare ahead of time.
For the 2025/26 tax year, you should consider:
Whether you need to file a Self Assessment return;
Which income sources you’ll need to declare;
How much you expect to earn from self-employment or rental income.
Currently, MTD only applies to income for the 2024/25 and 2025/26 tax years and does not include foreign income. If you earn money overseas, you should consult a tax advisor regarding digital filing requirements.
How to register for MTD — and what you’ll need
Before registering, make sure you have:
A Government Gateway ID (you can create one during the registration process);
Your National Insurance number;
Business details (e.g. name, start date) or, for landlords, rental income documentation (e.g. rent statements);
The name of your MTD-compatible software (e.g. QuickBooks, Xero, FreeAgent).
Taxpayers must use HMRC-approved software to:
Automatically record transactions;
Categorise income and expenses;
Submit quarterly reports and final declarations;
Provide tax forecasts and reminders.
Popular software options include Xero, QuickBooks, FreeAgent, Sage, and 123 Sheets.
Once your information is submitted, HMRC will confirm registration success by email or SMS within 5–7 working days. If you're not confident using digital systems or have multiple income streams, you can also ask an accountant or tax adviser to register on your behalf.
Once registered, you must:
Sign up for MTD for ITSA;
Use approved software to record and submit income/expenses;
Submit quarterly updates (instead of annually);
File a Final Declaration at the end of the tax year to confirm all income and reliefs;
No longer use traditional paper or Gov.uk SA tax return forms.
Do businesses need to register for MTD?
In addition to the upcoming MTD for Income Tax rollout (for landlords and self-employed earning over £30,000 from 2026), all VAT-registered businesses in the UK have been required to use Making Tax Digital for VAT since April 2022.
HMRC automatically registers all new VAT-registered businesses for MTD for VAT unless they are exempt or have applied for an exemption.
Therefore, if you're newly VAT-registered, there's no need to register separately — just use compatible software to maintain digital records and file your VAT returns.
Some advice from TB Accountants
Businesses registered for MTD for VAT must keep digital accounting records and use compatible software to submit VAT returns.
If you’re unsure about any aspect of digital filing, or if you’d like assistance registering through an accountant or tax agent, contact our team for professional support.
For individuals and businesses looking for UK taxation services, use our contact form to get in touch for more information.
Get in touch with us at info@tbgroupuk.com or for a free one-to-one consultation.
