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Making Tax Digital for Income Tax

We at MCC Partners are writing to inform you about significant changes to how self-employment and property income will be reported to HMRC through the Making Tax Digital (MTD) for Income Tax initiative. These changes will affect many of our clients, and we want to ensure you're fully prepared.

What is Changing?

From April 2026, HMRC is introducing a new digital way of reporting income from self-employment and property. This system, called Making Tax Digital (MTD) for Income Tax, will require:

  • Keeping digital records of your income and expenses
  • Sending quarterly updates to HMRC using MTD-compatible software
  • Submitting a final tax return at the end of the year

Who Will Be Affected and When?

The changes will be phased in based on your gross income from self-employment and property (before expenses and tax):

  • From 6 April 2026: If your gross income from these sources totals over £50,000
  • From 6 April 2027: If your gross income from these sources totals over £30,000
  • At a later date: If your gross income from these sources totals over £20,000 (timeline to be confirmed)

HMRC will use your most recent tax return to determine if you need to join MTD for Income Tax. If you're required to join, HMRC will contact you directly, but we recommend preparing well in advance.

Benefits of Joining Early

While these changes may seem significant, there are several advantages to embracing them early:

  1. Get comfortable with the new system before it becomes mandatory
  2. Reduce errors in your tax returns, saving time and money on corrections
  3. Access up-to-date financial information to help with business planning
  4. Smoother transition with our support during the voluntary period
  5. Access to HMRC's dedicated MTD Customer Support Team during testing
  6. More time to find and learn the right software for your needs

Common Questions

Will I need to file tax returns four times a year?
No. You'll submit quarterly updates of income and expenses, but these are simple summaries generated by your software – not full tax returns. You'll still submit one annual tax return which will include the information from your quarterly updates.

Will I need to pay tax quarterly?
No. The payment schedule isn't changing – this is just about how and when you report your income and expenses.

Will I need to keep more records than before?
You won't need additional records, but they will need to be kept digitally using MTD-compatible software.

Will this be expensive?
HMRC is working with software providers to ensure options are available at various price points, including free software for those with simple tax affairs.

How MCC Partners Can Help You Prepare

As your accountants, we're here to guide you through this transition. We can:

  1. Help you determine if and when you'll need to use MTD for Income Tax
  2. Advise on suitable software options for your specific circumstances
  3. Assist with setting up digital record-keeping systems
  4. Support you in signing up for the voluntary testing phase
  5. Provide ongoing support as you adapt to the new requirements

Join the Voluntary Testing Phase

We strongly recommend joining the MTD for Income Tax testing phase before it becomes mandatory. This allows you to:

  • Adapt to the new system at your own pace
  • Get familiar with the software and processes
  • Receive dedicated support from both our team and HMRC
  • Iron out any issues before the mandatory start date

Next Steps

  1. Contact us to discuss your specific circumstances and determine when you'll need to join MTD for Income Tax
  2. Consider your options for MTD-compatible software
  3. Let us know if you'd like to join the voluntary testing phase

At MCC Partners, we're committed to making this transition as smooth as possible for you. Our team understands the challenges faced by small businesses, and we'll provide the personal service you've come to expect from us. Please don't hesitate to contact us at 01474 619 990 or This email address is being protected from spambots. You need JavaScript enabled to view it. with any questions or concerns.

Yours sincerely,

MCC Partners
1a Saddington Street
Gravesend, DA12 1ED

For more information, visit gov.uk and search "Making Tax Digital for Income Tax"

The count down has begun!

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