MTD for IT: The Essentials

Making Tax Digital (MTD) is a government “digital first” initiative to modernise HMRC’s tax system, with the aim of making the whole process of tax simpler and more efficient.

All of an individual’s or entity’s tax information will be in one place (the digital account) and tax will be paid based on business activity during the year. It will be possible to upload and update the tax account in real time.

MTD started with MTD for VAT, which commenced in April 2019. The next step is MTD for Income Tax (MTD for IT), which is being phased in from April 2026.

MTD for IT has three main requirements;

• Keeping digital records  
• Making quarterly submissions to HMRC and  
• Making a final, year-end declaration.

Those affected will be required to keep digital records for Income Tax purposes.

The quarterly submissions will report details of your gross income and expenses. The reports will be cumulative, so no corrections will be necessary.

As your accountant, we will support you through these changes and provide the ongoing services that you need. However, the changes are potentially so fundamental that it will be necessary to review your current record-keeping systems and to reconsider what work you decide to do yourself and which activities you wish to include in the service we provide.

There is, however, a very simple antidote to the complexities of MTD for IT and this is for businesses to use compliant accounting software. In many cases, this will be best achieved using Cloud Accounting Software.

HMRC’s MTD Journey

HMRC’s journey with Making Tax Digital started with MTD for VAT. This has been in place for more than six years. In our experience, the process has been a smooth one. VAT registered businesses were required to keep digital records and make their quarterly submissions digitally.

Granted, VAT registered businesses were reporting quarterly anyway and the introduction of MTD for VAT was more of a change to the way the reporting was managed.

In contrast, it is a completely new process for those affected by MTD for IT, but we believe that it just requires being more “on top of”’ your record-keeping and will ultimately be of benefit to you. By keeping up-to-date digital records, you will have a real-time view of your financial affairs and potential tax liabilities, which will assist with tax planning and cash flow.

It should be noted that the implementation date for MTD for IT has been deferred several times, amidst much controversy. The MTD project was first announced in 2015 with the roll out of the VAT element in 2019.

MTD for IT will now be implemented in phases, the first part began on 6 April 2026.

Important Dates and Deadlines

MTD for IT start dates

6 April 2026: Those with annual gross income of over £50,000 from self-employment and / or property income.

6 April 2027: Those with annual gross income of over £30,000 from self-employment and / or property income.

6 April 2028: Those with annual gross income of over £20,000 from self-employment and / or property income.

By default, the reporting quarters will be based on the tax year. The filing deadlines will be one month after the quarter end as follows:

It will be possible to elect for the submissions to be made for quarters based on the calendar year, i.e. 1 April to 30 June, but the election must be made prior to the first quarterly submission.

Tax payment dates 

There will be no changes to the current tax payment dates.

Balancing payments will continue to be due by 31 January following the end of the tax year.

Payments on account will continue to be payable by 31 January and 31 July.

End of year submission 

After the fourth and final submission has been made, a ‘digital tax return’ will need to be submitted.

This will replace the current Self-Assessment Tax Return (SATR). It will be prepopulated with the information HMRC already holds, including any PAYE figures.

This return will report any relevant adjustments required for tax purposes to the quarterly information already submitted. You will also report any other income sources, as well as make any claims for reliefs. Any other information that would normally be reported on your annual tax return will be reported on the end-of-year submission.

Filing deadline

The end-of-year submission will be due by 31 January following the end of the tax year, just like the current SATR.

We are here to help

For those of you who will be mandated in April 2027 or 2928, now is  a good time to consider whether you are happy to undertake the reporting yourself, or whether you wish to include this in the services that we provide to you. If you have any queries or concerns, please do contact us.

You can also download are full, free guide here: MTD for IT