After years of discussion and delays, Making Tax Digital for Income Tax Self Assessment (MTD ITSA) is finally becoming a reality. While it may have felt like something that was always “a few years away,” the first wave of taxpayers will soon be required to comply.

If you’re self-employed or receive income from property, now is the time to understand what the changes mean and, more importantly, to prepare.

Who Will Be Affected?

From 6 April 2026, MTD for Income Tax becomes mandatory for individuals with qualifying income of more than £50,000 from self-employment, property, or a combination of the two, based on the figures reported on their 2024/25 tax returns.

HMRC will then extend the rules to those earning over £30,000 from April 2027, with further expansion planned in future years.

If your income places you in the first group, you should already be thinking about how you’ll meet the new requirements as your first return is now due.

What Will Change?

The biggest difference is how records are kept and submitted.

Instead of maintaining records however you choose and completing a single Self Assessment tax return each year, affected taxpayers will need to:

– Keep digital records using compatible software.

– Submit quarterly updates to HMRC.

– Complete an end-of-year finalisation process to confirm taxable income.

The aim is to modernise the tax system, reduce errors and provide taxpayers with a more up-to-date picture of their tax position throughout the year.

While the principles may sound straightforward, they represent a significant change for many businesses and landlords who have traditionally relied on spreadsheets, paper records or a once-a-year approach to bookkeeping.

Why You Shouldn’t Leave It Until the Last Minute

Moving to digital bookkeeping isn’t simply about buying software. It often involves reviewing existing processes, deciding how records will be maintained, and ensuring that income and expenses are recorded consistently throughout the year.

Leaving everything until the last minute can create unnecessary stress and increase the risk of errors.

How We Can Help

Every client is different, and there is no one-size-fits-all solution.

Some businesses are already using cloud accounting software and may only need minor changes to become compliant. Others may need support selecting suitable software, migrating records or establishing new bookkeeping routines.

Nicholsons can help you:

– Confirm whether MTD ITSA applies to you.

– Recommend software that suits your business.

– Set up compliant digital record keeping.

– Manage quarterly submissions on your behalf where appropriate.

– Ensure you remain compliant while minimising disruption to your business.

Our aim is to make the transition as smooth as possible so you can continue focusing on running your business.

Major tax changes can feel daunting, particularly when they involve new technology and different ways of working. The good news is that you don’t have to navigate the changes alone.

Our team is already helping clients prepare for Making Tax Digital, and we’ll work with you to find the approach that best suits your business.