Prepare for Making Tax Digital for Income Tax
Making Tax Digital for Income Tax (MTD for IT) will require small businesses, sole traders, and landlords to keep digital tax records and report income tax to HMRC using compatible software.
What is Making Tax Digital?
Making Tax Digital (MTD) is part of the Government’s plan to modernise the UK tax system, making it easier for people to get their tax right.
Phased rollout depending on annual income
Self-employed businesses and landlords will need to be MTD compliant, unless exempt, based on qualifying income.
Maintaining digital records
MTD impacted businesses are required to maintain digital records of business income and expenses.
Making Tax Digital compatible software
Businesses need to use compatible, HMRC-recognised MTD software to keep digital records and report income tax.
Quarterly reporting
Businesses must send income and expense updates quarterly, plus submit a final declaration annually.
Making Tax Digital timeline
Making Tax Digital for VAT (MTD for VAT) was introduced for all VAT-registered businesses, regardless of turnover, in April 2022. Here are the key dates and Making Tax Digital for Income Tax requirements you need to know:
April 2026
Making Tax Digital for Income Tax comes into place for sole traders and landlords earning above £50,000 annually.
April 2027
Making Tax Digital for Income Tax comes into place for sole traders and landlords earning above £30,000 annually.
April 2028
Making Tax Digital for Income Tax comes into place for sole traders and landlords earning above £20,000 annually.
All Xero business plans are MTD-ready
Each plan includes features to meet different needs, so you can choose the one that works best for you – including our new plan, Xero Simple. Available directly to small businesses, sole traders and landlords, it’s designed to give you the confidence and support with MTD for IT.
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Xero’s here to help with a free MTD for IT webinar
In this free webinar, we’ll break down what MTD means for you, what you need to do, and show you our MTD for IT solution in action.
Making Tax Digital for Income Tax
MTD for IT comes into effect from April 2026 for businesses, self-employed individuals, and landlords with income over £50,000. For those with income over £30,000, it comes into effect from April 2027, and for those earning over £20,000 from April 2028.
Learn more about MTD for ITSAMTD for IT comes into effect from April 2026 for businesses, self-employed individuals, and landlords with income over £50,000. For those with income over £30,000, it comes into effect from April 2027, and for those earning over £20,000 from April 2028.
Learn more about MTD for ITSAPreviously known as Making Tax Digital for Income Tax Self Assessment, MTD for IT replaces the annual Self Assessment tax return with a fully digital system. MTD for IT consists of four quarterly updates each year that include details of income and expenditure. Plus, a Final Declaration to confirm submissions are complete and correct. To comply with MTD for IT requirements, sole traders and landlords need HMRC-recognised software in place.
Previously known as Making Tax Digital for Income Tax Self Assessment, MTD for IT replaces the annual Self Assessment tax return with a fully digital system. MTD for IT consists of four quarterly updates each year that include details of income and expenditure. Plus, a Final Declaration to confirm submissions are complete and correct. To comply with MTD for IT requirements, sole traders and landlords need HMRC-recognised software in place.
MTD for Income Tax replaces the annual Self Assessment tax return with four quarterly updates and a Final Declaration. This means self-employed people and landlords will need to submit records of income and expenditure to HMRC more frequently. It also means these records need to be kept digitally. While this is an increase in reporting frequency, it does mean reporting income and expenditure closer to the time it was generated. Plus, sole traders and landlords can see an updated view of their tax liability with every submission, making it easier to plan for your bill.
MTD for Income Tax replaces the annual Self Assessment tax return with four quarterly updates and a Final Declaration. This means self-employed people and landlords will need to submit records of income and expenditure to HMRC more frequently. It also means these records need to be kept digitally. While this is an increase in reporting frequency, it does mean reporting income and expenditure closer to the time it was generated. Plus, sole traders and landlords can see an updated view of their tax liability with every submission, making it easier to plan for your bill.
Xero software is HMRC-recognised for MTD for Income Tax, and has all the tools you need to comply with the rules. You can keep digital records and submit compliant returns to HMRC. Plus, additional features can save you time and improve accuracy. For example, bank reconciliation predictions suggest matches for statement lines, so you can reconcile your accounts faster. Real-time tax estimates make it easier to plan for your bill. Plus, automatic updates in line with legislation help you stay on the right side of compliance.
Xero software is HMRC-recognised for MTD for Income Tax, and has all the tools you need to comply with the rules. You can keep digital records and submit compliant returns to HMRC. Plus, additional features can save you time and improve accuracy. For example, bank reconciliation predictions suggest matches for statement lines, so you can reconcile your accounts faster. Real-time tax estimates make it easier to plan for your bill. Plus, automatic updates in line with legislation help you stay on the right side of compliance.
More about Making Tax Digital
Since April 2022, all VAT-registered businesses have been required to follow Making Tax Digital (MTD) rules. Here's all the key information you need to know, including answers to common questions about MTD for VAT.
Learn more about MTD for VATSince April 2022, all VAT-registered businesses have been required to follow Making Tax Digital (MTD) rules. Here's all the key information you need to know, including answers to common questions about MTD for VAT.
Learn more about MTD for VATAll VAT registered businesses are required to follow MTD rules. That includes sole traders, limited companies, partnerships, charitable trusts, and landlords with at least one UK property. Here's everything you need to know about MTD for VAT as a business owner.
Learn more about MTD for businessesAll VAT registered businesses are required to follow MTD rules. That includes sole traders, limited companies, partnerships, charitable trusts, and landlords with at least one UK property. Here's everything you need to know about MTD for VAT as a business owner.
Learn more about MTD for businessesWe answer common questions about how accountants can prepare their clients and practice for MTD, including setting up your accounting practice for MTD and how to support clients who want to continue using spreadsheets.
Learn more about MTD for accountantsWe answer common questions about how accountants can prepare their clients and practice for MTD, including setting up your accounting practice for MTD and how to support clients who want to continue using spreadsheets.
Learn more about MTD for accountants
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Making Tax Digital software
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Making Tax Digital resources
Explore our MTD webinars, guides, articles, and FAQs for everything you need to know about MTD for Income Tax.
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