Understanding Making Tax Digital for Income Tax Self Assessment (MTD)

If you have self-employed income and/or rental income of £50,000 or more in the 2024/25 tax year, you will fall within the scope of MTD when it launches in April 2026.

This article explains what is changing, what you need to do, and how RBP Cloud Accounting will support you every step of the way.

What is MTD?

MTD is a government initiative to modernise tax reporting by moving it fully online.

From April 2026, taxpayers with qualifying income of over £50,000 (based on the 2024/25 tax year) will be required to keep digital records and submit quarterly updates to HMRC using compatible software.

This aims to make tax reporting more accurate and efficient, reducing surprises at year-end.

Who does it apply to?

• If your gross income from self-employment and/or property is £50,000 or more separately or combined in 2024/25, you must follow MTD rules from April 2026
• The £50,000 threshold is based on your gross income before expenses
• If your income is £30,000 or more in 2025/26, it will be mandatory from April 2027

What does this mean for you?

From 6^th April 2026, you will need to:

• Keep digital records of your income and expenses
• Submit quarterly updates to HMRC using MTD compatible software

Key dates and deadlines

Your first quarterly update will usually cover the period from 6^th April to 5^th July 2026 (or 1^st April to 30^th June 2026, if you make a calendar quarters election).

Subsequent quarters will end on:

• 5^th October (or 30^th September)
• 5^th January (or 31^st December)
• 5^th April (or 31^st March)

Each update must be submitted by the 7^th of the month following the quarter end. For example, your first update will be due by 7^th August, the second by 7^th November, and so on.

MTD Tax Return/Final Declaration

After submitting quarterly updates, you must file an MTD Tax Return/Final Declaration each tax year. This pulls together your quarterly figures plus any other taxable income, gains, reliefs, or claims, replacing the current annual Self Assessment tax return.

The deadline for submitting your MTD Tax Return/Final Declaration will remain 31st January following the end of the tax year. RBP will handle this for you as part of your accounting and taxation service.

Exemptions

Some taxpayers may be exempt from MTD if:

• It is not practical to use software due to age, disability, location, or other valid reasons
• You are a practising member of a religious society or order whose beliefs prevent you from using electronic communications

HMRC will require evidence to support your exemption claim. Applications cannot be submitted until October 2025, and applying does not automatically mean you will be exempt. HMRC must approve it first.

Penalties for late submissions

Late submissions will incur penalties under HMRC’s new points-based system. For full details, see the official guidance:

Please click here to read more on HMRC penalties for late submission

How RBP Cloud Accounting will help

MTD is a big change, but we are here to help. RBP Cloud Accounting will offer three levels of support, guiding you from your initial setup through to ongoing compliance.

What should you be doing now?

• Get your bank accounts in order
  Separate your business transactions — use dedicated bank accounts for your self-employment and property income
• Choose your bookkeeping approach
  Decide whether you will deal with MTD yourself or outsource it to RBP Cloud Accounting.

For more information, please listen to our latest two-part podcast explaining everything you need to know. Please see link below:

https://www.rbp.co.uk/podcasts