We have already seen the implementation of MTD for VAT. MTD for VAT effectively removed the ability to ‘re-key’ your VAT return boxes before submitting them to HMRC. This was a key part of the Governments drive with the aim of ‘reducing error’ and tax receipts lost as a result of error.
MTD for IT is a new way for sole traders and landlords to report their income and expenses to HMRC and will require individuals and businesses to:
- Keep digital records
- Use software compatible with Making Tax Digital
- Submit updates every quarter and submit a Final Declaration (instead of just one single annual tax return)
Since 6 April 2026, some sole traders and landlords must use it, based on their total annual income from self-employment and property.
MTD for IT will be introduced in three phases:
- from April 2026, for those with qualifying income over £50,000
- from April 2027, for those with qualifying income over £30,000
- from April 2028, for those with qualifying income over £20,000