Making Tax Digital (MTD) has been unfolding for several years, and the next phase is now in sight. If you are a sole trader, landlord or adviser who supports them, this is a practical moment to review systems, confirm scope and be ready for upcoming MTD changes. From April 2026, Making Tax Digital for income tax (MTD IT) begins for those above the first income threshold, with wider mandation following. That brings new processes – keeping digital records and sending quarterly updates through compatible software – and a different rhythm to year-end compliance. This article sets out what is already in place, what’s changing, the key dates to watch and simple steps to stay ahead.
Two quick headlines. First, all VAT-registered businesses must already keep digital VAT records and file through MTD-compatible software. Second, MTD IT is phased: timing depends on your level of “qualifying income” from self-employment and property. We explain those thresholds below, and link to HMRC’s official guidance so you can check your position. For context, the UK had 2.72m VAT and/or PAYE-registered businesses as at March 2024, a small fall year on year. That is a large group relying on digital record-keeping to stay compliant, and it underlines why preparation for MTD changes is best done early, not at the filing deadline. (ONS, 2024).
MTD changes: What’s already in place
For VAT, MTD has applied to all VAT-registered businesses since April 2022. In practice, that means: keep VAT records digitally and file VAT returns through compatible software or a compliant bridging tool. If you are still moving figures by hand or via copy-and-paste between systems, plan to tighten your digital links. That reduces error risk and avoids last-minute scrambles when processes change elsewhere in the business.
If you are new to digital VAT, HMRC maintains a public list of compatible products and bridging tools. Choose software that fits your bookkeeping workflow, rather than reshaping your workflow around software. Build in simple controls: bank feeds reconciled weekly, purchase invoice capture and periodic checks of VAT codes against your activity. This approach pays for itself in time saved and fewer corrections.
Key dates for MTD IT
Mandation is phased by qualifying income (your gross self-employment and property income before expenses).
- Over £50,000 in 2024/25: You will need to use MTD IT from 6 April 2026.
- Over £30,000 in 2025/26: You will need to use it from 6 April 2027.
- Over £20,000 in 2026/27: The government has announced it plans legislation so you start from 6 April 2028.
You must assess your position each year. HMRC will write to you ahead of your start date, but you remain responsible for checking if and when you are mandated. Partnerships are expected to join at a later date to be confirmed. Full details and a checker tool are on gov.uk.
What you will send under MTD IT
Under MTD IT you will keep digital records and, for each self-employment and property income source, send four quarterly updates through compatible software. Standard update periods are aligned to the tax year, with deadlines one month after each quarter end. If your software supports calendar quarters, you can align to month ends and keep the same one-month submission window. HMRC sets out the update periods and deadlines here: HMRC quarterly updates guidance.
At year end, you will make any required accounting and tax adjustments in software and submit a final declaration that replaces the SA100 for those within MTD. Importantly, HMRC has removed the end of period statement (EOPS) from the design – simplifying the process so there is no separate EOPS submission alongside your final declaration. This change was confirmed in the government’s small business review outcome and subsequent updates to guidance and regulations.
Practical scope checks to do now
- Income thresholds: Confirm your combined gross self-employment and property income. Remember: qualifying income is before expenses. If you are close to a threshold, consider how new income streams or price changes could move you into scope (HMRC eligibility guidance).
- Digital record-keeping: Check that your software can create and store the records HMRC expects, and that you have reliable digital links between source systems.
- Quarterly cadence: Map who will capture data, review it and press submit within each one-month window. Build a short checklist for each quarter to keep quality high.
- Year-end workflow: Plan how you will make year-end adjustments and complete the final declaration. Agree on responsibilities between you and your adviser early.
Penalties, interest and controls
HMRC operates a points-based late-submission regime for returns and regular updates. Late payment penalties and interest apply if tax is paid late. The takeaway is simple: build routines that support timely submissions and payments. Set calendar reminders, reconcile bank feeds weekly and run a pre-submission review to catch obvious errors. If cashflow is tight, talk to us early about payment plans to avoid avoidable costs. (HMRC provides full details of quarterly update timing and how the new system works.)
Getting your software and workflow ready
A smooth transition does not require a wholesale system rebuild. Focus on the basics.
- Bookkeeping rhythm: Weekly reconciliations, supplier capture rules and bank-feed exceptions reviewed promptly.
- Roles and backups: Who posts entries, who reviews, who submits updates. Have cover for holidays and year-end peaks.
- Evidence retention: Keep digital records for at least five years after the 31 January deadline for the tax year. Your software should make this automatic.
- Agent access: If we submit on your behalf, ensure agent authorisations are in place well before your first mandated quarter.
If you need support choosing or configuring software, we can help you weigh options against your activity, sector and reporting needs. Our VAT accountants can also review your digital VAT processes so VAT and income tax compliance work together. For personal reporting, our self assessment tax services team can handle submissions and manage HMRC correspondence. If you want us to look at day-to-day data capture, see bookkeeping services.
A short checklist for 2025/26
- Threshold check: Confirm whether 2026 or 2027 mandation will apply. Use HMRC’s tools and keep an eye on HMRC letters.
- Quarter-by-quarter plan: Add the four update deadlines to your calendar and assign responsibilities.
- Software review: Confirm compatibility, bank feeds, invoice capture and digital links. Run a mock quarter to test the workflow.
- Year end: Agree how adjustments will be captured and who will submit the final declaration now that EOPS has been removed.
How we can help
We have supported clients through every phase of MTD so far, from early VAT pilots to full digital roll-out. Our approach is practical: understand your business model, set a sensible quarterly workflow, and keep submissions accurate and on time. For many, small changes – standardising bank rules, tightening month-end routines, clarifying roles – deliver the biggest gains. The scale matters too. With millions of VAT and/or PAYE-registered businesses already in scope, and more taxpayers joining MTD IT from April 2026, planning now avoids a rush later (ONS, 2024).
If you would like a short MTD review, we can assess where you stand, highlight gaps against the new requirements and set out a simple plan to get you ready.
Ready for the next phase
MTD changes will arrive in waves – first for those over £50,000 from April 2026, then those over £30,000 from April 2027, with legislation planned to bring in £20,000 from April 2028. The move to digital record-keeping and quarterly updates is here to stay, and removing EOPS has simplified the year end. If you plan early, keep clean digital records, and give yourself a clear quarterly routine, you will reduce stress, spread effort through the year and keep cashflow surprises to a minimum.
If you are unsure what the MTD changes mean for you, get in touch. We can help you assess scope, set up the right software and create a quarterly plan so you are ready before your start date. Speak to us about your MTD changes today.