Preparing for Making Tax Digital for Income Tax (MTD) for Income Tax: What You Need to Know

The UK government is steadily pushing for the digitisation of tax returns, and Making Tax Digital (MTD) for Income Tax is a significant step in that direction. If you’re self-employed, a landlord, or a business owner, this change will affect how you report your income to HMRC. The transition to MTD for Income Tax is an important shift and understanding it now will save you time and stress in the future.

In this post, we’ll guide you through what MTD ITSA is, why it matters, and how Maeflower Bookkeeping can help you prepare for the upcoming changes.

What is Making Tax Digital (MTD) for Income Tax?

MTD for Income Tax is a part of the UK government’s broader initiative to make the tax system more efficient and transparent. From 6th April 2026, self-employed individuals, landlords and businesses with annual business/property income above £50,000*, will need to:

 ·        Sign up for MTD for Income Tax via HMRC’s website.

·         Keep digital records.

·         Use MTD-compatible accounting software, such as Xero.

·         Send quarterly business income and expenses updates to HMRC via the software.

·         Make a final declaration to HMRC at the end of the tax year, including any necessary adjustments, and submit to HMRC (this will replace the annual Self-Assessment Tax Return).

*Those with income over £30,000 are required to sign up for MTD from April 2027, and the threshold will be reduced further, to £20,000, at a later date.

This means that paper tax returns and manual record-keeping will be phased out, and you'll be required to report your income regularly throughout the year, instead of just once annually. The benefits of this are that business owners and landlords will be able to see a year-to-date indication of how much tax they owe, enabling better budgeting and planning.

The key objectives of MTD are:

• To streamline the tax process for taxpayers and HMRC.

• To reduce errors and fraud by digitising the process and using real-time data.

• To make it easier for individuals to track their tax obligations throughout the year.

Why Should You Prepare for MTD Now?

April 2026 may seem far away right now, but the sooner you get ahead of it, the smoother the transition will be and, starting this April not only give a full year to understand and implement the process but also avoid last-minute stress. Procrastination can lead to missed deadlines, late filings, and penalties but, by preparing early, you’ll have peace of mind knowing that you’re on track when the new system goes live.

How Can Maeflower Bookkeeping Help You Prepare for MTD?

At Maeflower Bookkeeping, we can help make your transition to MTD as smooth as possible. Here's how we can assist you:

1. Setting Up Digital Bookkeeping Systems
   If you haven’t already, it’s crucial to switch to cloud-based bookkeeping software that’s MTD-compliant and able to connect to HMRC’s systems. We can help you set up/switch-to and maintain systems that are compatible with HMRC’s MTD requirements, such as Xero, QuickBooks or FreeAgent.

2. Ongoing Bookkeeping
   MTD requires you to submit income and expenses data quarterly. We can help you stay on top of your finances by carrying out your bookkeeping throughout the tax year, ensuring your records are up-to-date and accurate, reducing the risk of mistakes.

3. Pay the Right Tax
   We’ll work with you to identify potential tax reliefs and deductions, ensuring you pay the correct tax.

4. Regular Tax Planning and Guidance
   Instead of scrambling to meet your tax deadline, we provide quarterly tax planning that keeps you informed about your financial situation and your tax obligations. We’ll guide you through the steps to ensure that you’re always prepared.

5. Smooth Digital Submissions
   We will handle the submission of your tax returns directly to HMRC, ensuring your filings are accurate, on time, and fully compliant with MTD requirements.

How to Get Started with Maeflower Bookkeeping

Preparing for MTD doesn’t need to be overwhelming. Our team at Maeflower Bookkeeping is here to support you every step of the way. Whether you need help setting up a digital system, understanding your quarterly filings, or paying the correct tax, we have the expertise to guide you through the process.

Get in touch today to schedule a consultation, and let’s ensure your business is MTD-ready for a smooth tax filing future.