Making Tax Digital
for Income Tax
FAQs for the Self-Employed and Landlords
Making Tax Digital (MTD) for Income Tax is no longer something on the horizon, it has now arrived. For many self-employed individuals and landlords, this represents one of the biggest changes to the tax system in recent years.
If you are unsure what it means for you, you are not alone. Below, we answer some of the most common questions we are hearing from clients.
What is Making Tax Digital for Income Tax?
Making Tax Digital for Income Tax (MTD for IT) is a government initiative designed to modernise the tax system. It requires individuals to keep digital records and submit updates to HMRC more regularly using compatible software.
Instead of one annual Self Assessment tax return, you will now need to submit:
Quarterly updates of your income and expenses
An End of Period Statement (EOPS)
A final declaration to confirm your overall tax position
The aim is to improve accuracy and give you a clearer, more up-to-date view of your tax throughout the year.
Who does MTD for Income Tax apply to?
MTD for Income Tax applies to:
Self-employed individuals
Landlords
You will be required to comply if your total income from self-employment and/or property exceeds £50,000 per year. This threshold will reduce to £30,000 from April 2027 and £20,000 from April 2028.
It is important to note that this is based on gross income, not profit.
When does it start?
MTD for Income Tax is now in effect from April 2026 for those earning over £50,000.
If your income is above the threshold, you should already be preparing to comply, if not already signed up.
What do quarterly updates involve?
Quarterly updates are summaries of your business income and expenses submitted to HMRC every three months.
They are not tax payments, but they do give HMRC (and you) a clearer picture of your tax position throughout the year.
Deadlines will fall roughly one month after each quarter ends.
Do I still need to submit a tax return?
Not in the traditional sense, but there are still year-end requirements.
At the end of the tax year, you will need to:
Finalise your accounts through an End of Period Statement (EOPS)
Submit a final declaration confirming all income, including anything outside of MTD
So while the process is different, the responsibility to ensure everything is accurate remains.
What records do I need to keep?
You will need to keep digital records of:
Income
Expenses
Business transactions
This must be done using compatible software such as Xero, rather than spreadsheets alone.
Many clients are now using tools like Xero alongside Dext or Hubdoc to automate record-keeping and reduce admin time.
What software do I need?
To comply with MTD, you must use HMRC-compatible software.
As Xero Platinum Partners, we support clients in setting up and using cloud accounting software that not only keeps you compliant but also gives you real-time financial insight.
The right setup can make a significant difference, not just for MTD, but for how you manage your business overall.
What are the benefits of MTD?
While MTD does introduce more frequent reporting, there are some clear advantages:
Better visibility of your tax position throughout the year
Fewer surprises at year-end
More accurate record-keeping
Opportunities to improve cash flow and decision-making
For many, this is a shift from “looking backwards” once a year to having ongoing financial clarity.
What should you be doing now?
If you are self-employed or a landlord, now is the time to:
Check if your income exceeds the threshold
Review how you currently keep records
Move to cloud-based software if you have not already
Understand your new reporting obligations
If you would like a more detailed overview, you can also read our previous guide here:
👉 https://www.pje.co.uk/newsfeed/mtd-for-income-tax-what-you-need-to-know
How we can help
At PJE Accountants & Advisors, we are already supporting clients through the transition to Making Tax Digital.
As a third-generation firm and Xero specialists, we focus on making compliance straightforward while helping you get more value from your numbers.
Whether you are starting from spreadsheets or already using software, we can guide you through the next steps.
Get in touch
If you are unsure how MTD for Income Tax affects you, or want to get set up properly, we are here to help.
👉 Contact us today to discuss your situation and make sure you are ready.
Posted - 27 April 2026