MTD for Income Tax - Update
What is the latest update?
As I’m sure many of you have heard previously HMRC are having a complete overhaul of the way Income Tax for the self employed and Landlords are reported to them. We have produced the below information to explain it and the impact.
What is MTD for Income Tax (IT)?
Making Tax Digital for Income Tax (MTD for IT) is a new way of handling your income tax affairs in the UK. It’s part of the UK government's wider plan to modernise the tax system by encouraging the use of digital tools for easier, more efficient tax management. In short, MTD for IT aims to help individuals, sole traders, and landlords keep on top of their taxes using online systems rather than paper forms.
If your Turnover from self-employment or lettings as a landlord is above £50,000 (from April 2026) and £30,000 (from April 2027) you will be required to keep your records digitally and submit quarterly returns to HMRC.
It will be a big change, but we are here to support you through the move onto digital software and set it up in a way that can be most beneficial for you. Please read our Previous Blog here for further information.
What are the Benefits?
Keeping records digitally has a number of benefits to you, provided the records are accurate and up to date.
BETTER VISIBILITY- on sales invoicing and reduces the time to get paid after completing a job.
ACCURACY - Reduce missed sales invoices, and ability to add payment services directly to invoices speeding up cashflow
BETTER BUSINESS INSITES - Up to date profit, allowing you to plan for the tax liability at the end of the year reducing risk of cash shortfalls
POTENTIAL FOR REGULAR REPORTING - Live Financial Data allowing for more meaningful conversations and better tax planning opportunities.
SAVE TIME - Harness technology to streamline processes reducing your admin time and giving you more free time or time to focus on what you do best.
What are the next steps?
We will be setting up access to Xero which meets all of the MTD requirements and is a powerful tool to record and track your business information. We have a number of experienced users here at GTP.
Training sessions are available and we also have exclusive access to a webinar being run with Xero themselves during which you will see how Xero works and ask any questions you may have.
There will be three options on recording this information going forwards;
Process the information yourself into Xero, submit the quarterly report to HMRC via Xero yourself and we will submit the end of year submission and self assesment correcting any errors
Process the information yourself into Xero, we will review this on a quarterly basis and submit the quarterly report to HMRC via Xero on your behalf and the finalise the end of year submission and self-assessment with any other information required.
We will complete the bookkeeping to keep your information in Xero real time, submit the quarterly reports and finalise the end of year submission and self-assessment with any other information required.
This is mandatory from April 2026 but we highly recommend starting the digital record keeping as soon as possible, ideally from this summer, in order to be ahead of the game and minimise the risk of errors when the reporting becomes mandatory. The sooner you get onto this, the better prepared you will be and more likely to remain compliant with HMRC.
We will directly be contacting those of you that meet the criteria to discuss in more detail but please feel free to reach out in the meantime.
Contact us if you have any questions
