A beginner’s guide to Making Tax Digital for Income Tax

For many business owners, moving away from existing record-keeping methods and tax requirements may feel like a significant change; however, many businesses are already making the transition to Making Tax Digital for Income Tax successfully. 

More than 570,000 customers have signed up to Making Tax Digital for Income Tax, and more than 436,000 sole traders and landlords sent their first quarterly updates by the 7 August deadline. 

For many, using software which works with Making Tax Digital for Income Tax and keeping digital records has become part of their day-to-day business administration, helping them stay organised and keep on top of their finances throughout the year.

The growing number of businesses already using the service shows that making the switch to digital record-keeping is both manageable and beneficial when approached early.  

What is Making Tax Digital for Income Tax? 

Making Tax Digital for Income Tax is a government initiative designed to modernise the UK tax system and changes the way self-employed individuals and landlords manage and report their income and expenses.

It requires taxpayers who meet the qualifying income threshold to keep digital records and use software which works with Making Tax Digital for Income Tax to send information to HMRC electronically.   

Find out when you need to start using Making Tax Digital for Income Tax. 

Even if the rules do not apply to you yet, now is a good time to start thinking about how digital record keeping could benefit your business. Getting familiar with digital tools early can make any future transition much smoother. 

What do I need to do? 

From 6 April 2026, some sole traders and landlords must use Making Tax Digital for Income Tax, based on their total annual income from self-employment and property.  

Making Tax Digital for Income Tax is being introduced in phases, with self-employed individuals and landlords with qualifying income over £50,000 mandated from April 2026, those with income over £30,000 joining from April 2027, and those with income over £20,000 from April 2028, giving taxpayers time to prepare for the transition to digital record-keeping and reporting.   

You, or your agent if you have one, will need to use software that works with Making Tax Digital for Income Tax to:   

• create digital records of your self-employment and property income and expenses -  Use Making Tax Digital for Income Tax - Create digital records - Guidance - GOV.UK 

• send your quarterly updates to HMRC  - Use Making Tax Digital for Income Tax - Send quarterly updates - Guidance - GOV.UK 

• submit your tax return by 31 January the following year   

This will help you stay on top of your tax affairs and business planning, supporting you to grow your business.  

To get started, you can follow the step-by-step guide on GOV.UK: Making Tax Digital for Income Tax for sole traders and landlords: step by step - GOV.UK 

Top tips

• Seek support if needed: if you work with an accountant, bookkeeper or tax agent, they can help you understand what’s required and plan a discussion about who does what, e.g. signing up for Making Tax Digital for Income Tax, submitting quarterly updates and your end-of-year tax return.   

• Stay aware of key dates: as with any tax obligation, it’s important to understand what information you need to provide and when it needs to be submitted. 
  Setting reminders or using software that provides deadline notifications can help you avoid unnecessary stress and last-minute paperwork. 

You can see key dates here: Quarterly updates for Making Tax Digital - HMRC Guide 

• Start keeping digital records: many software products allow you to upload and save receipts and invoices electronically. Keeping everything in one place can make recordkeeping simpler and help you find information when you need it. 

• Plan ahead: digital recordkeeping and tools can provide a better view of your finances throughout the year, helping you understand business performance and prepare for upcoming tax obligations.  

• Sign up for Making Tax Digital for Income Tax: you can choose whether you want to sign up before you are legally required to do so, to help you prepare.  Waiting until compliance becomes mandatory can make the transition more stressful. Starting to understand the changes early gives you time to learn new processes and resolve any issues. 

Find out more 

This article provides a high-level introduction to Making Tax Digital for Income Tax. For a more detailed explanation, including eligibility, timelines and practical guidance, read Grow London Local's comprehensive guide: What Making Tax Digital for Income Tax for Income Tax Means for You 

And visit GOV.uk for all Making Tax Digital for Income Tax guidance:  

• Making Tax Digital for Income Tax for sole traders and landlords: step by step – GOV.UK

• Making Tax Digital for Income Tax as an agent: step by step – GOV.UK

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