Making Tax Digital: What Self-Employed People Should Know
The UK government is rolling out Making Tax Digital (MTD) to modernise the tax system. By moving away from paper records and annual tax returns, HMRC aims to make tax reporting more accurate and efficient.
Who Does It Apply To?
From April 2026, MTD for Income Tax Self Assessment (ITSA) will apply to self-employed people and landlords with an income of £50,000 or more. From April 2027, it will extend to those earning £30,000 or more.
What Changes Under MTD?
- Quarterly Updates: Instead of one tax return, you’ll submit income and expenses digitally every three months.
- Digital Record-Keeping: Paper records will no longer be allowed. You’ll need MTD-compatible software (such as QuickBooks, Xero, or FreeAgent).
- End of Year Finalisation: You’ll still make a final submission to confirm income and expenses.
Preparing for MTD
- Choose digital software that’s HMRC-approved.
- Start practising now by keeping digital records, even if not required yet.
- Understand deadlines so you don’t face penalties.
Why It Matters
The shift to Making Tax Digital for the self-employed means earlier reporting and stricter record-keeping. Preparing ahead of time will make the transition smoother and help you avoid fines.
