Making Tax Digital for Income Tax, or MTD for ITSA, is now a reality for many sole traders and landlords.
And if phrases like digital records, compatible software and quarterly updates are making you nervous, you're definitely not alone.
But here's the good news: MTD doesn't have to be scary.
In fact, with the right systems in place and a bookkeeper alongside you, much of the work can simply become part of your normal bookkeeping routine.
First, what actually changes?
Under MTD, you'll need to keep digital records of your self-employment and/or property income and expenses using compatible software, such as Xero.
You'll then send HMRC a quarterly update. But this is the bit that's easily misunderstood: these updates aren't four full tax returns.
They're summaries of the income and expenses recorded in your software. HMRC says you don't need to make accounting or tax adjustments before submitting a quarterly update.
That suddenly sounds a little less intimidating, doesn't it?
And you don't have to do it alone
This is where working with a bookkeeper can make a huge difference.
Rather than waiting until the end of the year and handing over a pile of receipts, good bookkeeping means your records are kept up to date throughout the year.
Your bookkeeper can help make sure transactions are recorded correctly, your software is set up appropriately and your records are ready for those quarterly submissions.
So instead of four extra mountains of admin, MTD can become part of the bookkeeping that's already being done.
There's another benefit too: more regular bookkeeping can give you a much clearer idea of how your business is actually performing throughout the year.
Who does MTD affect?
MTD for Income Tax is being introduced gradually.
If your qualifying income from self-employment and property combined was over £50,000 in 2024/25, you should already be using MTD from 6th April 2026.
The threshold then reduces to:
Over £30,000: from 6th April 2027
Over £20,000: from 6th April 2028.
Importantly, we're talking about gross qualifying income before expenses, not profit.
Dates for your diary
For those already within MTD in 2026/27, the first quarterly deadline of 7th August 2026 has passed.
The next deadlines are:
7th November 2026 – second quarterly update
7th February 2027 – third quarterly update
7th May 2027 – fourth quarterly update.
And don't forget that your 2025/26 Self Assessment still needs to be submitted in the usual way by 31st January 2027
Don't fear MTD. Get organised for it.
The biggest mistake you can make with MTD is ignoring it because it feels complicated.
You don't need to become a bookkeeping expert. You just need the right system and the right support.
If you're unsure whether MTD applies to you, worried you've already missed something or want help getting ready for the next threshold in April 2027, speak to Lucie and the team at LEO Bookkeeping.
We'll help make MTD feel a lot less scary. 💜
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