Making Tax Digital starts now – are you ready for the changes?

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Making Tax Digital represents one of the biggest changes to the UK tax system in many years.

For decades, most sole traders and landlords have reported their income to HMRC through a single Self Assessment tax return each year. That familiar routine is about to change.

From April 2026, many taxpayers will need to keep digital records and send information to HMRC throughout the year using compatible software.

For some people the shift will feel small. For others, it will require new systems and habits. Either way, the change is coming – and early preparation will make the transition far easier.

What Making Tax Digital actually is

Making Tax Digital (often shortened to MTD) is HMRC’s plan to move the UK tax system fully into the digital age.

Under the new rules, taxpayers will no longer rely on a single annual Self Assessment return alone. Instead, they will keep digital records of income and expenses and send regular updates to HMRC using approved software.

In simple terms, the process will involve:

  • – Keeping digital records of income and expenses
  • – Using Making Tax Digital compatible software
  • – Sending quarterly updates to HMRC
  • – Submitting a final end-of-year declaration to confirm totals

The tax you pay will still depend on your profits for the year. What changes is the way information reaches HMRC.

Who will be affected

Making Tax Digital for Income Tax mainly affects:

  • – Sole traders
  • – Landlords
  • – People with both business and property income

The rules will arrive in stages.

From April 2026
People with combined self-employment and property income above £50,000 will need to follow the new digital reporting rules.

From April 2027
The threshold will reduce to £30,000.

Future plans
The government has indicated that the system may extend to people earning more than £20,000 in the future.

This phased approach means millions of taxpayers will eventually fall within the scope of the rules.

What will change in practice

The most noticeable change will be how often you’ll need to send information to HMRC.

Instead of submitting one annual Self Assessment return, taxpayers will report information several times during the year.

The typical process will look like this:

  • – You keep digital records of your business and property income and expenses
  • – Your software sends quarterly updates to HMRC
  • – At the end of the tax year you submit a final declaration confirming the figures
  • – You pay your tax by the usual 31 January deadline

The quarterly updates are not full tax returns. They simply provide HMRC with a running summary of income and expenses.

The end-of-year submission still confirms your final tax position.

Why HMRC is introducing Making Tax Digital

HMRC says the changes aim to make tax reporting simpler and more accurate.

According to the government, digital record keeping will:

  • – Reduce mistakes caused by manual data entry
  • – Give taxpayers a clearer view of their finances throughout the year
  • – Help people understand their likely tax position earlier
  • – Modernise the UK’s tax administration system

Making Tax Digital already applies to many VAT-registered businesses. The expansion to income tax represents the next step in that digital programme.

Concerns raised by businesses and accountants

Although the goals sound sensible, the changes have raised concerns.

One of the biggest issues is awareness. Many sole traders and landlords remain unaware that the rules are changing.

Other concerns include:

  • – The need to learn new digital systems
  • – Additional reporting requirements during the year
  • – The cost of accounting software
  • – The extra administrative work for small businesses

For people who already keep well organised digital records, the transition may feel straightforward. Those who rely on spreadsheets or paper records may need to adjust their processes.

How to prepare for the changes now

April 2026 is now upon us, so the time to be ready is now.

Useful steps include:

  • – Check whether your income will place you within the new rules
  • – Review how you currently record income and expenses
  • – Consider switching to digital accounting software
  • – Speak with your accountant about the upcoming requirements
  • – Look at the voluntary testing programme if you want to adopt the system early

Early preparation also allows you to test systems and processes before the rules become mandatory.

How the tax experts at Dux Advisory will help you adapt

Professional advice will play an important role in helping businesses move smoothly to the new system.

Our tax specialists are here to support your business by –

  • – Recommending suitable accounting software
  • – Setting up digital record keeping systems
  • – Managing quarterly reporting requirements
  • – Ensuring submissions meet HMRC requirements
  • – Helping your business remain compliant as the rules evolve

With the right systems in place, many businesses will find the ongoing reporting process straightforward.

Dux Advisory – ready to make sure you’re ready

Are you a sole trader or landlord who may fall within the new Making Tax Digital rules?

Now is the time to review how you record income, report tax and manage your accounts.

Speak with the tax specialists at Dux Advisory for clear, practical advice on preparing for Making Tax Digital and keeping your reporting compliant and efficient.

Contact Dux Advisory today – we’re ready to make sure you’re ready.

Author

Dan Hart

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