Making Tax Digital for Income Tax: What You Should Be Doing Now

Making Tax Digital for Income Tax: What You Should Be Doing Now

If you’ve established that Making Tax Digital for Income Tax will apply to you, the real question becomes:

What should you actually be doing now?

With the first phase starting on 1 April 2026, the biggest risk isn’t the rule itself. It’s leaving preparation too late.

What Will Change in Practice?

Under MTD for Income Tax, affected individuals must:

Keep digital records
Submit quarterly updates
Submit a final end-of-year declaration

Quarterly updates are summaries of income and expenses. They are not separate tax payments.

However, they do mean that reporting becomes an ongoing process rather than a once-a-year task.

For many, that represents a significant shift in habits.

The Common Pitfalls We’re Seeing

Based on current client conversations, the main risks are:

Relying on spreadsheets or paper records
Catching up bookkeeping at year-end
Underestimating the time involved in quarterly submissions
Assuming April 2026 is “a long way off”

The administrative rhythm is changing. Systems and habits need to change with it.

Practical Steps to Take Now

If your income is approaching or exceeds the threshold, here’s where to focus.

1. Review your gross income
Confirm whether your combined self-employment and property income crosses £50,000.

2. Assess your current bookkeeping system
If you are not already using compatible accounting software, you will need to transition.

3. Improve record-keeping discipline
Quarterly submissions leave less room for retrospective corrections. Accurate categorisation matters.

4. Speak to your accountant early
Quarterly reporting may increase compliance work. It’s better to clarify processes and fees well in advance.

Why Early Preparation Matters

The individuals who prepare early will experience a smoother transition.

Those who wait until early 2026 are likely to face:

Time pressure
Software learning curves
Increased risk of errors
Potential penalties for non-compliance

MTD is not designed to create panic. But it does reward preparation.

Final Thought

Making Tax Digital for Income Tax is one of the most significant changes to Self Assessment in recent years.

If you’re affected, this year is about getting organised. Reviewing income levels, tightening bookkeeping, and ensuring the right systems are in place.

April 2026 is approaching quickly. The advantage will go to those who act before it feels urgent.

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