MTD for Income Tax, made simple
Keep digital records and send quarterly updates to HMRC straight from Xero.
What you get with Xero for MTD for Income Tax
HMRC-recognised software that takes the tax admin off sole traders and landlords.
Keep digital records automatically
Bank feeds pull your income and expenses into Xero, so your records stay complete and ready to report.
Send quarterly updates to HMRC
Xero gathers your figures and files each quarterly update to HMRC, so you're ready before the deadline.
File from HMRC-recognised software
Records, updates and your final declaration sit in one place, submitted to HMRC straight from Xero.
For anyone thinking of moving to Xero, I‘d say do it. It’s probably the best decision that your business is ever going to make.
Hitesh, the founder of construction company IKPE Ltd
Keep digital records without manual entry
Your transactions are pulled into Xero automatically through bank feeds, so your records stay complete and quarter-ready.
Organise your digital records in one place
Xero automatically calculates and logs your income, expenses, and taxes – ready for your HMRC reporting.
Let automations do the work for you
For every tax update, Xero automatically fills in the details – and reminds you before your next deadline.
Check MTD submissions for mistakes
Xero live-tests your submissions with HMRC so you can make any corrections and feel confident.
Connect your bank accounts
Your data flows into Xero, where automations suggest transaction matches to speed up your reconciliations.
Pull your figures together each quarter
Xero gathers your figures for each quarterly update to HMRC, so you're ready well before the deadline.
Get more MTD for Income Tax advice
Know when the rules apply to you
Not sure when you're in? MTD for Income Tax applies to sole traders and landlords once your qualifying income passes HMRC's threshold. Check the current thresholds and start dates on GOV.UK.
Check the MTD for Income Tax timeline
Stay covered for VAT too
Registered for VAT? Xero is HMRC-recognised for MTD for VAT as well, calculating and filing your VAT alongside your income tax in the same place.
Explore Xero's VAT features
FAQs on Xero's MTD for Income Tax
MTD for Income Tax is HMRC's digital way for sole traders and landlords to report income tax. You keep digital records and send quarterly updates plus a final declaration using compatible software like Xero, instead of one annual Self Assessment return.
MTD for Income Tax is HMRC's digital way for sole traders and landlords to report income tax. You keep digital records and send quarterly updates plus a final declaration using compatible software like Xero, instead of one annual Self Assessment return.
It applies to sole traders and landlords whose qualifying income is above the threshold for the current phase. The threshold lowers as the rollout continues, so check where it sits now on GOV.UK. If you're VAT-registered, that's covered by MTD for VAT, a separate scheme.Here's more on MTD for landlords.
It applies to sole traders and landlords whose qualifying income is above the threshold for the current phase. The threshold lowers as the rollout continues, so check where it sits now on GOV.UK. If you're VAT-registered, that's covered by MTD for VAT, a separate scheme.Here's more on MTD for landlords.
The rollout is phased by qualifying income. Check the current thresholds and start dates for each phase on GOV.UK.
The rollout is phased by qualifying income. Check the current thresholds and start dates for each phase on GOV.UK.
Qualifying income is your combined gross income from self-employment and property, before expenses. If that total sits above the current threshold, you're in. The threshold steps down over the rollout, so check the current figure on GOV.UK. Here's more for the self-employed.
Qualifying income is your combined gross income from self-employment and property, before expenses. If that total sits above the current threshold, you're in. The threshold steps down over the rollout, so check the current figure on GOV.UK. Here's more for the self-employed.
You sign up through HMRC's online service, or your accountant or bookkeeper can do it for you. Once you're signed up, connect Xero to HMRC and you're ready to send updates. Sign up for MTD for Income Tax on GOV.UK.
You sign up through HMRC's online service, or your accountant or bookkeeper can do it for you. Once you're signed up, connect Xero to HMRC and you're ready to send updates. Sign up for MTD for Income Tax on GOV.UK.
Yes, Xero is HMRC-recognised software for both MTD for Income Tax and MTD for VAT, so you can keep digital records and submit to HMRC from one place. MTD for Income Tax filing is in beta, subject to registration and eligibility.
Yes, Xero is HMRC-recognised software for both MTD for Income Tax and MTD for VAT, so you can keep digital records and submit to HMRC from one place. MTD for Income Tax filing is in beta, subject to registration and eligibility.
Under the standard 6 April to 5 April tax year, you send HMRC an update for each quarter, then a final declaration after the year ends. Xero flags what's due and readies each update, so you file on time. Check the exact dates for the current tax year on GOV.UK.
Under the standard 6 April to 5 April tax year, you send HMRC an update for each quarter, then a final declaration after the year ends. Xero flags what's due and readies each update, so you file on time. Check the exact dates for the current tax year on GOV.UK.
Possibly. You may be able to apply for an exemption if you're digitally excluded. Apply directly to HMRC on GOV.UK.
Possibly. You may be able to apply for an exemption if you're digitally excluded. Apply directly to HMRC on GOV.UK.
They're two separate HMRC initiatives, each with its own dates and rules. MTD for VAT covers VAT-registered businesses reporting VAT; MTD for Income Tax covers sole traders and landlords reporting income and expenses each quarter plus a final declaration. You sign up for each one separately.
They're two separate HMRC initiatives, each with its own dates and rules. MTD for VAT covers VAT-registered businesses reporting VAT; MTD for Income Tax covers sole traders and landlords reporting income and expenses each quarter plus a final declaration. You sign up for each one separately.
Plans for growing businesses
Ignite
for the first 6 months
Then £18 per month
An easy financial foundation - track cash flow with the essentials.
- Send quotes and 20 invoices†
- Accept online invoice payments^
- MTD for Income Tax ready
- Reconcile transactions
- Smart document capture
- View real-time reports
- Enter 10 bills
- Submit VAT returns to HMRC
- Automate subcontractor CIS calculations and reports
- Make online bill and payroll payments (domestic) for £0.20 per payment††
- Payroll for £1.50 per person
- 30 day cash flow forecast
- Visualise performance with basic graphs
- Company accounts and tax (optional £120 excl. Vat billed annually)
Grow
for the first 6 months
Then £39 per month
Go beyond the basics - automate tasks and access performance dashboards.
- Send invoices and quotes
- Accept online invoice payments^
- MTD for Income Tax ready
- Reconcile transactions
- Smart document capture
- View real-time reports
- Automate bill entry and track bills
- Submit VAT returns to HMRC
- Automate subcontractor CIS calculations and reports
- Make online bill and payroll payments (domestic) for up to 5 payments
- Payroll for 1 person
- 60 day cash flow forecast
- Visualise performance with graphs
- Customise performance dashboards
- Claim expenses and mileage for 1 user
- Company accounts and tax (optional £120 excl. Vat billed annually)
Comprehensive
for the first 6 months
Then £55 per month
Optimise profitability - tailor your insights for greater control.
- Send invoices and quotes
- Accept online invoice payments^
- MTD for Income Tax ready
- Reconcile transactions
- Smart document capture
- View real-time reports
- Automate bill entry and track bills
- Submit VAT returns to HMRC
- Automate subcontractor CIS calculations and reports
- Make online bill and payroll payments (domestic) for up to 10 payments
- Payroll for 5 people
- 90 day cash flow forecast
- Visualise performance with graphs
- Customise performance dashboards
- Claim expenses and mileage for 5 users
- Use multiple currencies
- Tailored financial health scorecards
- Make online bill payments (International) - Optional add-on
- Company accounts and tax (optional £120 excl. Vat billed annually)
- Budget with smart suggestions
Ultimate
for the first 6 months
Then £70 per month
Future proof your scaling business - with advanced tools and analytics.
- Send invoices and quotes
- Accept online invoice payments^
- MTD for Income Tax ready
- Reconcile transactions
- Smart document capture
- View real-time reports
- Automate bill entry and track bills
- Submit VAT returns to HMRC
- Automate subcontractor CIS calculations and reports
- Make online bill and payroll payments (domestic) for up to 15 payments
- Payroll for 10 people
- 180 day cash flow forecast
- Visualise performance with graphs
- Customise performance dashboards
- Claim expenses and mileage for 10 users
- Use multiple currencies
- Tailored financial health scorecards
- Make online bill payments (International) - Optional add-on
- Track time and costs for projects for 10 users
- Analyse KPIs and ratios
- Benchmark against the industry
- Company accounts and tax (optional £120 excl. Vat billed annually)
- Budget with smart suggestions
Not VAT registered? See plans for simpler business needs.View plans
Get one month free
Purchase any Xero plan, and we will give you the first month free.
