If your business turned over more than £50,000 last year, you need to pay attention. HMRC’s Making Tax Digital (MTD) for Income Tax mandate kicks in on 6 April 2026 — that’s just two weeks away — and a lot of businesses haven’t sorted it yet.
Here’s what you need to know, and what to do right now.
What Is Making Tax Digital for Income Tax?
Making Tax Digital for Income Tax is HMRC’s digital-first system for self-employed traders and property investors. Instead of once-a-year tax return filing, it requires quarterly updates sent directly to HMRC using compatible software.
The data sits with HMRC throughout the year. At the end of the tax year, you simply confirm the figures — no lengthy return preparation, no guesswork.
Sounds simple. But the execution matters.
Who Needs to Use It?
You must sign up if:
- Your total annual income from self-employment and property is over £50,000
- You’re registered for Self Assessment
- You’ve submitted a tax return in the last two years
You can opt in early if you’re below £50,000. It’s worth considering — it forces quarterly discipline instead of leaving everything to December.
You may be exempt if you have a disability or long-term health condition, live abroad, work in certain regulated professions, or are in your first year of self-employment.
Check the HMRC exemption guidance to see if you qualify. Most business owners don’t.
The Real Deadline Crunch
Here’s the uncomfortable part: you should have already signed up.
If you’re required to use MTD from 6 April 2026, HMRC expects you to be registered and ready to send quarterly updates from day one. If you wait until April to sign up, you’ll be scrambling to backfill Q1 numbers (January–March 2026) while also trying to run your business.
Worse, if you miss a quarterly update, HMRC starts issuing penalties immediately. This isn’t a case where they’ll give you grace; the penalties regime is already live.
The Setup You Need (Do This Now)
- Check your exemption status. Visit the GOV.UK guidance above. Takes 10 minutes.
- Get compatible software. You can’t use Excel or QuickBooks Basic. Your provider needs MTD-certified software. Common ones include QuickBooks Online, FreeAgent, Xero, Wave, and Dext. Confirm with your provider that they support MTD for Income Tax specifically (some only cover MTD for VAT).
- Set up your agent services account. If you work with an accountant, they’ll need this account to sign you up. If you’re handling it yourself, set one up via HMRC online.
- Get authorization in place. If you use an accountant, they need written permission to sign you up. Many already have this from your Self Assessment authorization, but verify it’s been added to their agent services account.
- Sign up before 6 April. Once your software is ready and authorizations are confirmed, you or your accountant can sign you up in HMRC’s online service.
What Changes About Your Tax Year?
Starting 6 April 2026:
- Quarterly updates instead of annual filings. Every three months, you’ll send HMRC a summary of income and expenses for that quarter. Your software handles the math.
- Real-time record-keeping. You can’t file quarterly updates weeks later. Your records need to be current in MTD-compatible software before you submit.
- Year-end confirmation instead of a tax return. At year-end, you submit a “final declaration” based on your quarterly data. HMRC already has everything — no scramble to gather documents.
- Faster refunds (potentially). Since HMRC has your data throughout the year, refunds can be processed faster if you’re owed one.
The downside: faster penalties if you’re late. There’s no grace period. Miss a quarterly deadline and penalties apply immediately.
The Common Mistakes Businesses Make
- Confusing MTD for Income Tax with MTD for VAT. These are different systems. You might already use MTD for VAT. MTD for Income Tax is new and separate. Don’t assume your current setup covers both.
- Signing up at the last minute. If you sign up in late March, you’ll immediately have to backfill Q1 data while running your business. Sign up this week instead.
- Not checking software compatibility. Some packages claim MTD support but don’t handle MTD for Income Tax specifically. Ask your provider directly. Get confirmation in writing.
- Leaving everything to your accountant. Your accountant can sign you up, but you need to authorize them and confirm you’re both ready. If you vanish after signing up, they can’t make quarterly entries for you.
- Neglecting quarterly bookkeeping. MTD fails if your records lag. If you let bookkeeping slide until December, you’ll be in a mess.
What to Do This Week
- By Tuesday 26 March: Contact your accountant or software provider. Confirm you’re MTD-ready and ask them to sign you up.
- By Thursday 28 March: If you’re self-employed and don’t use an accountant, sign up via HMRC’s agent services online portal. (Despite the name, individuals can use this to set up their own MTD.)
- By Friday 29 March: Confirm your software is ready. Run a test quarterly update if possible.
- By Monday 1 April: Your setup should be done. April 6 shouldn’t be a surprise.
The Bottom Line
Making Tax Digital for Income Tax isn’t optional for most of you anymore. The deadline is two weeks away. The system is straightforward once you’re in it, but the onboarding matters.
If you’re unsure whether you’re in scope, get clarification now. If your accountant hasn’t mentioned MTD yet, chase them. If your software vendor says they’re “working on support,” find a provider who has it ready.
The penalty regime is live. HMRC is serious about this. Being late isn’t a paperwork headache — it’s a compliance failure.
Get sorted this week. You’ll thank yourself come April.
Need help navigating MTD for your business? Get in touch. We’ve worked with dozens of SME owners and FDs through the transition, and we can help you avoid the common pitfalls and make sure your systems are genuinely compliant from day one.
Contact us for a no-obligation conversation about your MTD readiness.