MAKING TAX DIGITAL FOR INCOME TAX: YOUR POST-REGISTRATION GUIDE (2026)
Making Tax Digital (MTD) for Income Tax (IT) is a significant change for self-employed UK taxpayers, and especially small business owners.
If you've already registered for MTD for Income Tax, you're a step closer towards modernised tax reporting. Now, let's clearly outline what comes next to ensure you're fully prepared.
Sadler Advisory’s mission is to make tax as stress-free and efficient as possible for UK small businesses with personalised advice and support.
So we’ve created this guide to help London and UK-based limited companies, freelancers, sole traders prepare for MTD for IT so they can avoid disruption and keep focus on running their businesses.
Snapshot of MTD for IT Key Changes | |
Change: | Effect: |
Shift from Annual to Quarterly Assessment | Replaces a single annual Self Assessment return with continuous digital record-keeping and quarterly cumulative updates via compatible software, followed by a final year-end declaration |
Core Audience | Affects sole traders and landlords rather than limited companies. |
Phased Rollout: | Thresholds: |
April 2026 | Mandatory for those with gross qualifying income over £50,000. |
April 2027 | Expanded to income over £30,000 |
April 2028 | Planned reduction to income over £20,000 (or lower phases) |
HAVEN'T REGISTERED YET? DO IT NOW
For those who haven't yet registered for MTD for Income Tax, it's essential to understand that MTD for IT is being introduced in phases. Starting from April 2026, self-employed individuals and landlords with income over £50,000 will need to follow MTD for IT rules. This threshold drops to £30,000 from April 2027.
To register, you'll typically need:
Your National Insurance number.
Your business start date.
Your accounting period dates.
Details of your eligible business income.
CHECK YOUR SOFTWARE IS UP TO THE TASK
One of the core aspects of MTD for IT is the requirement to keep digital records and submit updates using MTD for IT compatible software. If you've already registered, verifying your chosen software is compliant and effective is the first thing you need to do.
Your software needs to be able to three things:
Record all your business income and expenses digitally.
Send quarterly updates to HMRC directly from the software.
Submit an End of Period Statement (EOPS) and a final declaration.
Our team has extensive experience with various MTD for IT compliant platforms, and we often find that businesses benefit from software that goes beyond basic compliance. Make sure the tools you use actually provide the functionality you need.
Bank Feed Integration: This allows your transactions to flow directly into your accounting software, reducing manual data entry and errors.
Receipt Capture: Tools that let you photograph receipts and extract data can save significant time.
Reporting Capabilities: Software that offers clear financial insights can help you make informed business decisions throughout the year, not just at tax time.
LINKING YOUR BUSINESS BANK ACCOUNT OR SETTING ONE UP
While not a direct MTD requirement, having a dedicated business bank account is a fundamental principle of good financial management and becomes even more important with MTD for IT. Separating your business and personal finances makes record-keeping significantly clearer and simpler, which is essential for digital submissions.
If you haven't already, consider opening a business account. As this creates a clear distinction between your personal and business transactions, making it much easier to track income and expenses for MTD for IT reporting.
Also, most MTD for IT compatible accounting software can securely link with your business bank account. This integration allows for automatic categorization of transactions, substantially reducing the time you spend on manual entry and improving accuracy.
Without a separate business account, tracing every relevant transaction for your quarterly updates can become a complex and time-consuming process. We advise all our clients, particularly freelancers and sole traders, to set up distinct business banking.
This step alone can massively simplify your MTD for IT compliance and overall financial clarity.
KEY DATES TO MARK IN YOUR DIARY FOR 2026 AND BEYOND
MTD for Income Tax introduces new reporting rhythms. These dates are critical for anyone registered:
Quarterly Updates: You will need to submit reports of your business income and expenditure every quarter. These deadlines are typically:
5 August (for the quarter ending 5 July)
5 November (for the quarter ending 5 October)
5 February (for the quarter ending 5 January)
5 May (for the quarter ending 5 April – if your year-end is 5 April)
End of Period Statement (EOPS): After your final quarterly update for the tax year, you will need to submit an EOPS for each source of business income. This confirms that the figures for the tax year are complete and accurate. You'll have until 31 January following the tax year to submit your EOPS. For example, for the tax year ending 5 April 2027, the EOPS would be due by 31 January 2028.
Final Declaration: This replaces the traditional Self Assessment tax return and includes all your income sources, not just those covered by MTD. This is also due by 31 January after the tax year.
It's worth noting that penalties for late submissions may apply, so maintaining a clear understanding of these dates and planning your reporting schedule is vital.
YOUR PARTNER IN PROACTIVE TAX MANAGEMENT
MTD for Income Tax is an opportunity to gain clearer, more regular insights into your business’s financial health, which, in the long-run, we believe will be a plus for UK businesses.
Taking these essential post-registration steps (confirming your software, establishing clear business banking, and understanding the new reporting calendar) will set your business up for success.
We are here to partner with you, offering the expertise and support you need to meet your obligations and focus on what you do best. If you have any questions or require assistance with any aspect of MTD for Income Tax, please do not hesitate to contact us at Sadler Advisory.
And, be sure to check out our blog, which provides awesome expert insights, tips and updates on accounting and all things tax that are relevant to your business.
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