Making Tax Digital

Making Tax Digital (MTD)

MTD for Income Tax (MTD for IT) is part of the Government’s digital tax strategy and will require individuals who meet specific criteria to submit their income and expenses digitally to HMRC. This is part of the effort to make the tax system more efficient, accurate, and streamlined.

Who will MTD affect?

MTD will affect individuals for the 2026/27 tax year with income from self-employment and/or property (UK and Foreign rental income) who meet the following criteria:

• Business turnover exceeding £50,000 per year
• Property income exceeding £50,000 per year
• A combination of both exceeding £50,000 per year

These totals are reduced to £30,000 per year for the 2027/28 tax year, with a further reduction to £20,000 from April 2028.

If you meet the criteria, you will be required to report income and expenses quarterly, rather than once a year, and submit your returns through MTD-compliant software. However, the payment of tax will not be required to be made quarterly.

MTD’s Benefits

There are several benefits to this change in how income is reported to HMRC:

• Greater accuracy: Submitting income and expenses digitally reduces the risk of human error in record keeping and the preparation of the annual return.
• Faster processing: HMRC will process returns more quickly, ensuring that you can address any issues or tax liabilities sooner.
• Improved compliance: The new system ensures that tax records are kept up to date, reducing the chances of missing deadlines or misreporting.

If you have any questions or concerns about Making Tax Digital, please contact the Connolly team.