Making Tax Digital for Income Tax: What Every Self-Employed Founder Needs to Know (and Do) Right Now
- rosielavell4
- Jun 9
- 6 min read
It shouldn’t be news to you that the UK tax system is changing… Literally Everything.
Every Budget, a new announcement lands. A tax goes up, a rule shifts, a threshold moves. But Making Tax Digital isn’t a tweak. It’s not a minor admin update buried in the small print. It’s a complete overhaul of how self-employed people and landlords report their income to HMRC.
And as of April 2026, it’s no longer coming. It’s here.
Download the Free MTD Readiness Checklist
I’ve put together a step-by-step MTD Readiness Checklist so you know exactly where you stand and what to do next. It covers everything from knowing your threshold to submitting your first return, in plain English.
A Bit of Background
PAYE (Pay As You Earn) came in around 80 years ago. It gave people in employed roles the peace of mind that their tax and National Insurance contributions were being handled automatically, deducted at source, nothing to file, nothing to worry about. A system that, honestly, just works.
But for anyone earning income outside of PAYE - whether that’s self-employment, rental income, or a side hustle that’s grown into a business - the Self Assessment tax return has been the annual ritual. One return, once a year, due 31st January. You’d scramble to pull your records together, breathe a sigh of relief when it was filed, and get on with the rest of the year.
That system is being replaced. And the replacement is called Making Tax Digital for Income Tax.
It’s Been a Long Time Coming (But the Clock Has Run Out)
Making Tax Digital was first announced in the 2015 Spring Budget. Over a decade ago. There’s been a lot of noise, a few delays, and more than a few collective sighs of relief when the deadline got pushed back.
In July 2020 right in the middle of the Covid chaos, HMRC confirmed April 2024 as the go live date. Which again, got delayed to April 2026. Which, as of this moment, is no longer a date in the future, but in the past.
We are now in the first quarter of the 2026-27 tax year. MTD for Income Tax is fully live. An estimated 2.9 million sole traders and landlords are affected by this regime, with around 874,000 falling into this first wave of changes and, staggeringly, approximately 700,000 of them are not yet registered.
This is no longer about preparing for the changes. This is about taking immediate action.
So What Actually Is MTD for Income Tax?
Making Tax Digital started with VAT. If you’re VAT registered, you’ve already been through this: digital records, compatible software, submissions through an approved platform. MTD for Income Tax follows the same principle, but applies to your self-employment and rental income instead.
In simple terms, it replaces the self-employed and landlord pages of your Self Assessment with something altogether different. Here’s what the new structure looks like:
4 Quarterly Updates: a summary of income and expenses sent to HMRC every three months
1 Final Declaration: replacing your Self Assessment return, submitted after the tax year ends
And here’s the thing I want to be very clear on, because it causes a lot of unnecessary panic: the quarterly updates are not tax payments. They’re reporting submissions, a snapshot of your income and outgoings for that period. Your tax payment schedule doesn’t fundamentally change. You’ll still be making 2 payments a year: 1 in January and 1 in July. Think of them as regular check ins rather than one big end of year bill.
The biggest shift is this: you need to keep your records digital and up to date throughout the year. No more once a year mad rush of panic. For organised founders, this is actually a relief. For those who’ve been winging it on a spreadsheet and a prayer, it’s time to change the approach.
The Deadlines You Need in Your Calendar
MTD for Income Tax is rolling out in waves, based on your qualifying income (that’s your self-employment and rental income combined):
Over £50,000 - mandatory from 1st April 2026 (that’s now)
Over £30,000 - mandatory from 1st April 2027
Over £20,000 - mandatory from 1st April 2028
And for those already in the first wave, the quarterly filing deadlines are:
Quarter 1 (April–June): due 7th August
Quarter 2 (July–September): due 7th November
Quarter 3 (October–December): due 7th February
Quarter 4 (January–March): due 7th May
Final Declaration: 31st January following the end of the tax year
That first 7th August deadline is closer than it looks. If you’re in the first wave and haven’t moved yet, now is genuinely the time.
How to Actually Take Action
Before your first quarterly submission, three things have to be in place. Not nice to have. Not on the list. Actually done.
1. Registered for MTD Income Tax with HMRC This is separate to your existing HMRC online account. It's a specific sign-up for the MTD scheme, for the correct tax year. If you haven't done this, you can't submit. Check now.
2. Software chosen, set up, and authorised MTD-compatible software isn't optional, and choosing it isn't enough. It needs to be fully set up and authorised to communicate with HMRC on your behalf before your first deadline. This is where most DIY attempts fall down, people buy the software, never complete the authorisation, and only discover the problem when they try to submit.
3. Bookkeeping brought up to date You cannot submit accurate quarterly figures if your records are months behind. Before your first submission, you need a clean starting point. That means reconciled accounts, categorised transactions, and nothing sitting in a shoebox waiting for January.
Once these three are in place, everything else; diarising deadlines, building a monthly routine, understanding your figures becomes manageable. But without them, you're not ready. And unlike Self Assessment, MTD won't wait for you to catch up.
Download the Free MTD Readiness Checklist
I’ve put together a step-by-step MTD Readiness Checklist so you know exactly where you stand and what to do next. It covers everything from knowing your threshold to submitting your first return, in plain English.
Why Most People Overcomplicate the Software Decision
I've watched founders spend three weeks comparing software they'll use for twenty minutes a month.
They read reviews. They watch demos. They ask in Facebook groups and get twelve different opinions. They worry about integrations they'll never use and features they don't yet understand. And then they either pick the wrong thing in a panic, or they don't pick anything at all and the deadline creeps closer.
Here's the truth: for most sole traders, the software decision comes down to one question, how hands-on do you want to be with your bookkeeping?
If the answer is "as little as possible, I just want it handled," FreeAgent is where I'd start. Simple, intuitive, and free if you bank with NatWest or Mettle.
If you've got more complexity; multiple income streams, expenses across different categories, a business that's growing fast, Xero gives you more to work with.
Everything else is noise until you've answered that one question.
The mistake isn't picking the wrong software. It's spending so long deciding that you run out of time to set it up properly and an app that's downloaded but not configured is worth exactly nothing on 7th August.
The Biggest Mistake I See Sole Traders Make
And it's probably not what you'd expect.
It's not choosing the wrong software. It's not missing a deadline. It's not even forgetting to register.
It's this: deciding that MTD is the moment to go it alone, when you've never done your own tax return in your life.
I see it regularly. A sole trader who's always handed everything to their accountant in January, never really engaged with the numbers, suddenly decides they'll sort MTD themselves. They download an app. They watch a YouTube video. They spend a Sunday afternoon feeling productive.
And then the first quarterly deadline arrives and they realise three things at once: their records are three months behind, the software isn't connected to HMRC, and what they thought would take an hour is actually going to take a week.
Self Assessment was forgiving in a way MTD simply isn't. You could ignore your books for eleven months and do a mad scramble in January. MTD doesn't give you that runway. It requires consistent, accurate records throughout the year, every quarter, without fail.
The sole traders who navigate this well aren't necessarily the most organised. They're the ones who were honest with themselves early: about what they know, what they don't, and where they actually need support.
Where Do You Go From Here?
I’ll be honest with you: the founders I worry about aren’t the ones asking questions. It’s the ones who haven’t thought about it yet, who are still assuming January 2027 is someone else’s problem.
The fact you’re reading this puts you ahead of most people. The next step is actually doing something about it.
If you’re fully set up: keep your bookkeeping tight, diarise those quarterly dates, and carry on. MTD is just part of the rhythm now.
If you’re nearly there: set aside two hours this week to close the gaps. It’s less work than you think.
If you’re not sure where to start: that’s exactly what Ginger Bucks is here for. MTD doesn’t have to be something you figure out alone.
Download the Free MTD Readiness Checklist
I’ve put together a step-by-step MTD Readiness Checklist so you know exactly where you stand and what to do next. It covers everything from knowing your threshold to submitting your first return, in plain English.
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