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What do I need to know about Making Tax Digital for Income Tax?

Making Tax Digital for Income Tax
What do I need to know about Making Tax Digital for Income Tax?

From April 2026, HMRC will roll out Making Tax Digital for Income Tax Self Assessment (MTD IT), changing the way self-employed individuals and landlords manage and report their income tax. At Satori Accounting, we want to help you prepare for this transition and ensure you’re ready to stay compliant while simplifying your tax processes.

Who Is Affected?

If you are:

  • A self-employed business owner, OR
  • A landlord earning rental income,

you could be affected by MTD IT. HMRC’s goal is to improve accuracy and reduce tax errors by requiring digital record-keeping and more frequent reporting.

Criteria for Being Mandated Into MTD IT

You will be mandated into MTD IT if:

  • Your total gross income from self-employment and/or property exceeds £50,000 from April 2026.
  • From April 2027, this threshold will lower to £30,000.

If your income falls below these thresholds, you won’t need to sign up, but voluntary participation is available for those who wish to adopt digital practices earlier.

How to Sign Up for MTD IT

When the time comes, you can sign up for MTD IT through HMRC’s website. The process will require:

  1. Your Government Gateway user ID and password.
  2. Your National Insurance number.
  3. Details of your business or property income.

Satori Accounting can also help manage this process for you, ensuring a seamless registration and transition.

Software Requirements

To comply with MTD IT, you’ll need to use HMRC-approved software to:

  • Keep digital records of income and expenses.
  • Submit quarterly updates to HMRC.
  • File your final declaration at the end of the tax year.

Using spreadsheets alone won’t meet the MTD IT requirements unless they are combined with bridging software.

How Xero Will Be Used for MTD IT

At Satori Accounting, we recommend Xero—a fully HMRC-compliant cloud accounting solution. Xero allows you to:

  • Easily log income and expenses.
  • Automate bank feeds for real-time tracking.
  • Prepare and file your quarterly submissions directly to HMRC.
  • Generate reports to simplify your year-end declaration.

We’ll ensure your Xero account is fully set up for MTD IT, giving you peace of mind that you’re always compliant.

Quarterly Filings and Deadlines

Under MTD IT, you’ll submit quarterly updates to HMRC, providing a summary of income and expenses. After the fourth quarter, a final declaration (similar to the current Self Assessment tax return) will be submitted.

Quarterly Deadlines Example:

  • Q1: 5 April – Submit by 5 May
  • Q2: 5 July – Submit by 5 August
  • Q3: 5 October – Submit by 5 November
  • Q4: 5 January – Submit by 5 February

You will still pay your tax bill by 31 January following the end of the tax year.

Get Ready for MTD IT – Join Our Free Webinar!

We know that MTD IT is a big change, and we’re here to help. Join our free webinar in March 2025 where we’ll dive deeper into:

  • How MTD IT works.
  • How to set up Xero for MTD IT.
  • Tips for managing quarterly filings.

Click here to register for the webinar →

Let’s make your transition to MTD IT simple and stress-free!

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