Making Tax Digital for Income Tax (MTD for Income Tax) becomes mandatory from April 2026 for many sole traders and landlords. If you are affected, the practical question is how to get ready for MTD early enough to avoid a rushed software choice, messy records, and penalties. MTD for Income Tax shifts self assessment from an annual task to a year-round routine, where you keep digital records and send quarterly updates using compatible software. In practical terms, how to get ready for MTD means setting up a reliable monthly process now, not trying to change everything at the last moment.
This is relevant to a wide slice of the UK economy. The Office for National Statistics (ONS) recorded around 4.1 million self-employment jobs in the UK in 2025 Q3, which gives a sense of the scale as the MTD thresholds reduce over time (ONS, 2025). Below we explain who is in scope, what software you need in practice, and how to get ready for MTD with clear, workable steps.
Who is in scope from April 2026
MTD for Income Tax applies to individuals with qualifying income from self-employment and/or property. HMRC has set start dates based on your qualifying income in earlier tax years:
- Over £50,000 qualifying income: Mandatory from 6 April 2026, based on your 2024 to 2025 qualifying income (Check if and when you need to use MTD for Income Tax).
- Over £30,000 qualifying income: Mandatory from 6 April 2027, based on your 2025 to 2026 qualifying income.
- Over £20,000 qualifying income: The government has set out plans to lower the threshold further, with legislation expected to confirm when it will take effect.
Two practical points matter. First, the threshold test is based on income, not profit. Second, HMRC may write to you if you are above the threshold, but you remain responsible for checking and preparing.
A common scenario is a business with high turnover and tight margins. For example, a sole trader with £70,000 turnover and £25,000 expenses has profit of £45,000, but qualifying income of £70,000, so they are likely in scope from April 2026.
If you have more than one trade, or both trade and rental income, a quick review of your last return and a simple forecast will usually clarify your start date. This is a core first step in how to get ready for MTD, because it sets your preparation timeline. If you would like us to help, you can see what we do on our services page.
What software you need, and what “compatible” means
MTD for Income Tax is not simply “filing online”. You, or your agent, must use software that works with HMRC systems. HMRC’s step-by-step guidance summarises the core requirements: creating and storing digital records, sending quarterly updates, and submitting the year-end return through the software (HMRC, 2025).
In practical terms, compatible software should help you:
- Record transactions: Capture income and expenses in a structured way, ideally with bank feeds to reduce manual entry.
- Keep an audit trail: Correct errors without losing what was entered before, so changes remain traceable.
- Apply consistent categories: Use the same coding approach month to month, so quarterly updates are not a guessing exercise.
- Handle multiple sources: Support more than one trade, and property income where relevant.
If your records are currently paper-based, spreadsheet-led, or left until the year end, how to get ready for MTD is largely about building a sustainable routine. Better records usually improve cashflow visibility too.
If you want support getting your records tidy and your processes consistent before the first mandatory year, our bookkeeping services can help.
How to get ready for MTD: a straightforward 90-day plan
A smooth transition usually comes from getting the basics right, then repeating them. Here is a practical 90-day plan we use when clients ask us how to get ready for MTD.
- Start date and responsibilities: Confirm whether you are likely to start in April 2026 or April 2027, and decide who will keep records week to week.
- Software selection: Choose software that fits how you trade, set it up, and run it alongside your current method briefly.
- Data clean-up: Reconcile the bank, fix duplicated suppliers, and align categories so reporting stays consistent.
- Monthly routine: Set a fixed monthly date to reconcile, review key categories, and chase missing receipts.
- Quarterly rehearsal: Run at least one quarter on the new system before you are mandated.
- Tax review: Ask us to review treatment of common items, such as private use adjustments and capital items.
If your start date is April 2027, practising during 2026 still reduces stress. It also confirms your approach works in practice.
Quarterly updates and the year-end submission
Quarterly updates are summaries of income and expenses sent through your software. They help keep records current, but they do not replace the year-end process. You still submit your year-end information through software and you still pay any tax due by 31 January after the end of the tax year.
The risk is less about the mechanics of sending updates and more about letting records drift. Three habits reduce that risk quickly:
- Separate business banking: Keep personal items out of the business account wherever possible.
- Review little and often: A monthly review is normally easier than a quarterly scramble.
- Ask early on grey areas: Resolve uncertainty while the evidence is easy to find.
Next steps before April 2026
If you are researching how to get ready for MTD, start with a reality check: confirm whether your qualifying income for 2024 to 2025 or 2025 to 2026 puts you in the April 2026 or April 2027 group. Then focus on a routine you can maintain, digital capture of records, regular reconciliation, and a short monthly review. If digital tools are genuinely not practical because of disability, location or other reasons, HMRC offers exemptions, but you should plan and apply in good time.
The main risk we see is leaving preparation too late, then choosing software in a hurry and trying to tidy records at the same time. That increases disruption and increases the chance of late or incorrect submissions.
We can support you on how to get ready for MTD with a review, a practical software and process recommendation, and an implementation plan based on your records and start date. If you want a clear action list for how to get ready for MTD, book a short call and we will map the steps and responsibilities, then set you up to run the process confidently. Get in touch with Thomas Barrie to arrange an initial discussion about how to get ready for MTD.