Making Tax Digital
The way that the self-employed and landlords’ pay their tax is changing and form April 2026 they will be required to use the Making Tax Digital for Income Tax.
This is where you will no longer complete a tax return, but you make data submissions every quarter and the period are as follows:
Quarter 1 April to June 2026
Quarter 2 July to September 2026
Quarter 3 October to December 2026
Quarter 4 January to March 2026
Timeline for Making Tax Digital for Income Tax
From April 2026, self-employed individuals and landlords with an income of more than £50,000 will be mandated into MTD for ITSA.
Those with an income of between £30,000 and up to £50,000 will be mandated from April 2027.
Making tax Digital for Income Tax would not be extended to landlords and sole traders with income under £30,000 at this time. However, the Government will keep this decision under review, and there remains the possibility that this population will be brought into MTD for ITSA at some point in the future. At this time I can only suggest that those in this bracket will continue to submit tax returns.
Digital Records
Digital records for Making tax Digital are where you upload data via an API (application programming Interface).
From this you will not be able to enter data you can only copy and paste it and according to HMRC this will reduce errors.
Software
If you use bookkeeping software such as Xero, Sage, FreeAgent then all you need to do is to have all your data into the software and this can submit to HMRC as the software’s are already set up Making Tax Digital for Income Tax.
The cost of this for the year is £500.00 and this is an allowable business expense so this will be included with your trading expenses.
If you choose not to use software, then is possible to use spreadsheets and you will need to subscribe for these as they have an API link in the spreadsheet so you would copy and paste the data into the API spreadsheets and submit this from there.
The cost is much less than the software so you may choose this option.
Data Submissions
If you are going to submit the data yourself then you will need to be registered for Making Tax Digital for Income Tax with HM Revenue and Customs.
If you use an Accountant or Tax Adviser, then they will be able to make these data submissions for you.
Thes data submissions will be in a cumulative basis so if you miss a transaction then it will be included in the next submission but watch out for the quarter 4 submission as this need to be complete with no transactions missing.
There is a final submission for the year so don’t forget this one.
Late filing Penalties
If you need help or want more information on Making Tax Digital, please contact us:
Call 07795 425032