Making Tax Digital 2026: Are You Ready?

It’s a brand new year and with it brings a significant change in the way individuals report their income to HMRC. From April 2026, many landlords, sole traders and self-employed individuals will be required to keep digital records and submit regular updates using approved software - are you ready for those changes?

What is Making Tax Digital?

Making Tax Digital (MTD) is part of HMRC’s long-term plan to modernise the UK tax system. Under MTD, taxpayers will no longer rely solely on an annual tax return. Instead, income and expenses must be recorded digitally and submitted to HMRC every quarter through MTD-compatible software, followed by a final year-end declaration.

The intention behind the changes is to improve accuracy, reduce errors and give taxpayers a clearer, more up-to-date picture of their tax position throughout the year.

Who needs to comply with Making Tax Digital in 2026?

April 2026 is a key milestone because it marks the beginning of the phasing in of MTD and will apply to landlords, sole traders and self-employed individuals whose combined business and/or property income exceeds £50,000 per year.

Those with income below this level are not expected to be mandated until at least April 2027, as HMRC plans to lower the threshold in stages. Some groups have been deferred until 2029, and others may be permanently exempt, for example, if you have certain disabilities.

Even if you are not required to comply immediately, early preparation is strongly recommended to avoid a rushed transition later on.

How to prepare for Making Tax Digital

Getting ready for MTD involves more than simply meeting a new reporting deadline. It requires changes to how records are kept, how often information is reviewed and how submissions are made to HMRC.

One of the most important steps is moving to digital record-keeping. This means using MTD-compatible software to record income and expenses rather than relying on spreadsheets or manual systems - so now is the time to do your research and find one that works for you, as different software solutions suit different types of businesses and landlords.

Making Tax Digital penalties and how to avoid them

HMRC will operate a points-based penalty system for late submissions. While this may sound concerning, penalties can be avoided with the right preparation, systems and support in place. Staying organised, submitting on time and seeking professional advice will help ensure ongoing compliance and peace of mind.

Making Tax Digital represents a fundamental change, but you do not have to navigate it alone. We can help you choose suitable MTD-compatible software, set up digital records, understand how MTD affects your tax position and ensure submissions are made accurately and on time.

For more information and advice, contact MTD to see how we can help.

Katy Tovey