Making Tax Digital (MTD) is a major HMRC initiative that is refining the processes by which individuals, businesses, and accountants manage and submit tax information in the UK. For sole traders and landlords, navigating the rules, registration requirements, and software options for Making Tax Digital can feel overwhelming. To help you stay informed and compliant, we’ve put together answers to the most frequently asked questions about Making Tax Digital for Income Tax, covering everything from deadlines and software requirements to exemptions and how it affects different types of taxpayers.
To speak to our team about your individual circumstances or ask additional queries, you can contact us via phone, email, or by visiting us in branch.
1. What is Making Tax Digital for Income Tax and why is HMRC introducing it?
Making Tax Digital (MTD) is a UK Government initiative led by HMRC to modernise the tax system by requiring digital recordkeeping and online submissions using approved software. The goal is to reduce accounting errors, streamline the submissions process, and make tax easier for individuals and businesses. MTD is being rolled out to sole traders and landlords who have a gross annual taxable income over certain thresholds from self-employment and/or property letting. You can learn more about the upcoming income thresholds on the Government website, here: https://www.gov.uk/guidance/check-if-youre-eligible-for-making-tax-digital-for-income-tax.
2. Do I have to sign up for Making Tax Digital for Income Tax?
If you are above the taxable income thresholds, then yes, you must sign up for Making Tax Digital (MTD). It’s important to remember that these thresholds are based on your gross income (also known as turnover) from self-employment and/or property, before you deduct any expenses. Even if you’re below the threshold, you can still sign up voluntarily. Sole traders and landlords with a gross income over £50,000 will need to comply from April 2026, those over £30,000 from April 2027, and those over £20,000 from April 2028. If you work with an accountant, they can also complete the sign-up process on your behalf.
3. How do I register for Making Tax Digital for Income Tax?
To register, head to https://www.gov.uk/guidance/use-making-tax-digital-for-income-tax/signing-up and follow the steps to sign up and connect with your accounting software (ensuring it’s on the list of accepted, compliant providers). You can also register through your accountant who can act as your “agent” and complete the process for you.
4. How do I know if I’m already registered for Making Tax Digital for Income Tax?
There are a few ways to check if you are registered:
- Via HMRC online: log in to your HMRC account and check your “Services” page.
- Check your email inbox: If you signed up, you should have an email confirmation providing your email address is one of your preferred contact methods in your HMRC account (remember to check spam/junk folders!).
- Ask your accountant: If you work with an accountant, they’ll be able to confirm when you were signed up to MTD and your registration status.
- If all else fails – contact HMRC directly! HMRC’s support team will be able to confirm if you’re registered.
5. What is the deadline for registering for Making Tax Digital for Income Tax?
MTD for Income Tax comes into effect in April 2026 for those with a gross income over £50,000, in April 2027 for those over £30,000, and in April 2028 for those over £20,000. Please note that registration is not instant, so we recommend registering in plenty of time (ideally over a month ahead of making your first submission) to ensure everything is in place and you have ample time to ask questions and set up your accounting platform.
6. What software do I need for Making Tax Digital for Income Tax?
You’ll need HMRC-recognised MTD-compatible software that allows you to maintain digital records and submit VAT returns directly to HMRC. To help you make your decision, the Government website provides a list of accepted providers here: https://www.gov.uk/guidance/find-software-that-works-with-making-tax-digital-for-income-tax. Some popular options we work with include QuickBooks, Xero, FreeAgent, Sage, Dext, and more.
7. Does Making Tax Digital apply to those under the income tax threshold?
It depends. If your gross income is under the income tax threshold, then MTD does not yet apply to you. However, you can still sign up voluntarily to get ahead of the new requirements.
8. Can I still use spreadsheets for Making Tax Digital (MTD) for Income Tax?
Yes, but only if you use bridging software by an accepted provider that connects your spreadsheet data to HMRC. This lets you stay compliant while using tools like Excel for recordkeeping. See a list of accepted providers here: https://www.tax.service.gov.uk/making-tax-digital-software.
9. Who does Making Tax Digital (MTD) apply to in the future?
From April 2026, MTD will apply to sole traders and landlords with a gross income over £50,000; then from April 2027, it will expand to those over £30,000; and from April 2028, it will apply to those over £20,000.
10. Can I opt out of Making Tax Digital for Income Tax
You may be able to opt out of MTD if you qualify for an exemption, such as digital exclusion due to age, disability, or location. You must apply to HMRC directly and provide evidence, which will be reviewed on a case-by-case basis. Individuals or businesses will not otherwise be able to opt out for any reasons not listed on the HMRC website.
11. What does Making Tax Digital mean for sole traders and landlords?
For sole traders and landlords, Making Tax Digital (MTD) will mean shifting from paper records or manual spreadsheets to digital recordkeeping using approved MTD software. However, bridging software can be used with tools such as Excel to help ease into the new process and won’t require a complete shift of processes.
Next Steps
Have additional queries? Reach out to our team for support with your accounts, MTD, and more: mail@mmgca.co.uk. You can also visit us in branch – see our office locations on our contact page.