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Making Tax Digital for Income Tax: The UK’s Biggest Tax Shift Since Self-Assessment 

Making Tax Digital for Income Tax: The UK’s Biggest Tax Shift Since Self-Assessment

From April 2026, self-employed professionals and landlords will no longer file just one tax return a year. You’ll be reporting every quarter. 

Sounds simple? It’s not. 

Making Tax Digital for Income Tax Self Assessment (MTD for ITSA) is one of the most ambitious (and disruptive) changes HMRC has ever rolled out. And it’s arriving faster than most people think. 

Let’s break it down. 

Who is affected and when?

  1. April 2026: If your gross income from self-employment and/or property exceeds £50,000, you’re in. 
  2. April 2027: Threshold drops to £30,000. 
  3. April 2028 (Expected): HMRC is planning to extend it to those earning over £20,000. 

Remember: It’s based on turnover, not profit. 

That means even if your profit is small, if your turnover crosses the threshold, you’re included. 

What changes under MTD for Income Tax?

  1. Quarterly digital submissions of income and expenses 
  2. Annual final declaration to confirm and adjust totals 
  3. Digital recordkeeping via MTD-compliant software 
  4. More frequent interaction with HMRC, less margin for delay or disorganisation 

If you’re also VAT-registered? Get ready to file 9 returns a year. 

What changes under MTD for Income Tax?

What if you don’t comply?

HMRC is introducing a points-based penalty system: 

  1. Miss one quarterly update? You get a penalty point. 
  2. Accumulate enough? You get fined. 
  3. Pay late? Expect penalties starting at 3%, increasing to 10% of unpaid tax after 30+ days. 

The problem no one’s talking about

There is still no clear, unified guidance from HMRC. 

  1. Software options are limited and often clunky 
  2. Most small business owners aren’t aware this is coming 
  3. Even experienced accountants are unclear on workflows 
  4. Many businesses are still on manual systems or outdated spreadsheets 

This isn’t just a change in process — it’s a cultural shift in how UK taxpayers handle their affairs. 

What you should do now

  1. Check your income from 6 April 2024 to 5 April 2025. If it exceeds £50k, you will be required to comply from 2026. 
  2. Move to digital systems NOW. Choose MTD-compliant software such as Xero, QuickBooks, FreeAgent, or bridging software. 
  3. Train yourself or your team on quarterly reporting basics. 
  4. Speak to a tax advisor about planning ahead, avoiding errors, and keeping costs low. 

How Lanop Can Help

At Lanop Business & Tax Advisors, we’re already preparing clients for this shift. 

  1. We assess if and when MTD applies to you 
  2. Recommend the right software for your setup 
  3. Train your team or handle submissions for you 
  4. Ensure compliance while minimising admin burden 

We’re not here to scare you. But if you’re earning over £50k, the countdown has already started. 

Want to understand what MTD means for your business?

Book a free consultation today.

Aurangzaib Chawla

Tax Partner

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About the Author

Aurangzaib Chawla is a UK-based tax advisor and Managing Partner at Lanop Business & Tax Advisors. With nearly two decades of experience, he supports individuals, landlords, and SMEs with proactive tax planning and compliance. Known for simplifying complex tax legislation, Zaib helps clients minimise liabilities while building sustainable, tax-efficient strategies for long-term success.

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Aurangzaib Chawla

At Lanop, I am providing my services as the Managing Partner and Tax Specialist. My expertise includes helping medium and small-scale businesses in their accountancy and legal requirements, business start-up support, strategic review, payroll system review and implementation, VAT and tax compliance to cloud accounting. I am also an expert in financial reporting, identifying and monitoring risks, strategic business development, client retention, market acquisition and deals closure by carefully planning my sales cycle. 

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