Bookkeeping for Your Company Tax Return

MTD Income Tax Returns

A good accountant will take the stress out of Making Tax Digital for Income Tax – but it’s important you understand what MTD means for your business. From finding MTD-compatible software, to submitting quarterly updates and keeping accurate records.

What is MTD IT?

Making Tax Digital for Income Tax is part of the wider government initiative ‘Making Tax Digital’. Its aim is to simplify how you do (and pay) your taxes, by keeping digital records and submitting smaller updates to HMRC throughout the tax year.

Who does MTD IT apply to, and do I need to register right now?

You may not need to register for MTD IT yet. At the moment, it depends on how much income you make across your sole trader and/or landlord businesses.

It’s important to note this will be across all your sole trader and property businesses. For example, if you have two sole trader businesses and you’re also a landlord, it’ll be a culmination of those earnings.

For example, if your qualifying income is over:

  • £50,000 for the 2024/25 tax year – you’ll follow MTD IT rules from 6th April 2026.
  • £30,000 for the 2025/26 tax year – you’ll follow MTD IT rules from 6th April 2027.
  • £20,000 for the 2026/27 tax year – you’ll follow MTD IT rules from 6th April 2028.


How do I work out my qualifying income?

HMRC checks your previous year’s tax return to decide if you must use MTD IT.

For instance, let’s say they are checking whether you need to follow MTD IT rules from April 2026. They’ll do this by looking at your 2024/25 tax return (that you’ll submit before 31st January 2026).

It’s important to remember this is only for sole trader and property income. Things like dividends or capital gains don’t count as ‘qualifying income’ and won’t need to be reported on your quarterly updates if you qualify.

If your income is below the threshold, you’ll continue filing Self Assessment returns as usual.

You can choose to join MTD IT early to make life easier – just ensure you use MTD-approved software!

VAT Returns

How MTD IT works

Instead of submitting one big Self Assessment tax return each year, you’ll create digital records and use software to send smaller updates of your business’ income and expenses each quarter, and then a final MTD Income Tax return.

Reporting deadlines for MTD Income Tax

The deadline to send each quarterly update is the 7th day of the month after that period update ends.

Check the deadlines below to submit an update to HMRC:

6th April to 5th July 7th August
6th July to 5th October 7th November
6th October to 5th January 7th February
6th January to 5th April 7th May

You’ll need to create separate quarterly updates for each trade. For example, if you have a sole trader business and you’re also a landlord, you’ll send two updates to HMRC each quarter. This is done using specialised software (for example, Pandle).

You only need to show your sole trader and/or property income in these quarterly updates.

Any other income, such as capital gains or dividends, will be added to your MTD Income Tax return. You’ll send this after all 4 quarterly updates have been submitted, and before 31st January following the end of the tax year it relates to – so it’s the same deadline as the Self Assessment tax return it’s replacing.

Can an accountant help me with MTD IT?

Yes definitely! An accountant can help you with Making Tax Digital Income Tax (MTD IT) by:

  • Explaining the rules around MTD.
  • Setting you up with MTD-approved software.
  • Helping you maintain digital records.
  • Preparing you for your quarterly returns.
  • Assisting with Year-End tax and planning.