Get MTD Ready for Income Tax
What You Can Do Now to Get Ahead Before 2026
What is Making Tax Digital for Income Tax?
Making Tax Digital (MTD) is HMRC’s plan to modernise the tax system - making it easier for people to get their tax right and stay on top of their finances.
If you’re a sole trader or a landlord with income over £50,000, you’ll be included in the first phase of MTD for Income Tax Self Assessment (MTD ITSA), starting April 2026.
That means:
You’ll need to keep digital records of your income and expenses,
Send quarterly updates to HMRC using MTD-compatible software, and
Submit an End of Period Statement (EOPS) and Final Declaration each year.
If your income is between £30,000 and £50,000, you’ll join the scheme from April 2027.
So even if it feels far away, it’s worth starting to prepare now.
Who MTD ITSA Applies To
You’ll be affected if you’re:
A sole trader (self-employed person) earning over £50,000, or
A landlord with property income over £50,000
And if you have both types of income, they’ll be added together to see if you meet the threshold.
If your income is below £30,000, you won’t be required to join MTD for now - but it’s still a good idea to understand what’s coming.
What Will Change
Right now, you probably:
Keep records on paper, spreadsheets, or a notebook,
Add things up at the end of the tax year, and
File a Self Assessment tax return online or through your accountant.
With MTD ITSA, that changes to:
Keeping digital records (in software like QuickBooks, Xero, or FreeAgent),
Sending updates every three months instead of one annual return, and
Reviewing your income and expenses regularly, rather than once a year.
It’s a shift in how you manage your finances — but once you get used to it, it can actually make life easier.
In many ways, MTD for Income Tax is just formalising good bookkeeping.
If you already keep your records up to date - tracking income, expenses, and receipts - you’re halfway there. MTD simply requires that this is done digitally and shared with HMRC quarterly. In other words, it’s bookkeeping with a digital deadline.
Why It’s Worth Preparing Early
The move to digital can feel daunting, especially if you’ve been using spreadsheets or paper records for years. But starting early has real benefits:
Time to learn new software - You can choose what works for you and get comfortable before it’s mandatory.
Less stress later - You won’t be scrambling at the last minute when MTD goes live.
Better financial awareness - Seeing your figures quarterly helps with cash flow, tax planning, and decision-making.
Support when you need it - Your bookkeeper or accountant can help you set things up smoothly, rather than rushing at deadline time.
Your 5-Step Readiness Checklist
If you want to get MTD-ready the easy way, start with these steps:
Check your income levels
Add up your self-employed and rental income to see if you’ll meet the £50,000 threshold by April 2026.Start keeping digital records
Even if you’re not filing quarterly yet, get used to tracking income and expenses digitally - in a spreadsheet or (even better) in software.Explore MTD-compatible software
Cloud accounting software like QuickBooks, Xero, or FreeAgent are all designed for MTD. There are also simpler options for smaller businesses - we can help you choose.Review your bookkeeping routine
Think about how often you update your records. Moving to monthly updates now will make quarterly submissions much easier later.Get advice from your bookkeeper or accountant
Every business is different. We can help you understand exactly how MTD will affect you and get a system in place before it becomes compulsory.
Common Worries (and Why You Don’t Need to Panic)
“I don’t use software - do I have to?”
Yes, eventually you will. But the key is finding something simple and affordable that fits how you work. There are even free options for small businesses.
“Will I have to do my own bookkeeping?”
Not necessarily! You can still have a bookkeeper (like us!) handle your records — MTD just means the information has to be stored and submitted digitally.
“I’ve heard it’s confusing.”
It can sound complicated, but with the right setup, it becomes second nature. That’s why starting early is such a good idea.
How RGR Can Help
At RGR Payroll & Accounting Services, we’re helping our clients prepare now - so the move to MTD feels smooth and stress-free.
We’ll:
Review your current system,
Recommend software that fits your business, and
Make sure you’re confident before 2026.
We believe MTD isn’t just about tax - it’s about giving you better control and understanding of your business finances.
Ready to Start Preparing?
The sooner you start, the easier it’ll be.
If you’re a sole trader or landlord unsure how MTD will affect you, get in touch — we’ll walk you through what you need and set you up for success.
Simplify your finances with RGR!
