E · Workflow, deadlines & operations
Making Tax Digital for Income Tax: Is Your Practice Ready?
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Quick answer
Making Tax Digital for Income Tax applies from April 2026 to sole traders and landlords with qualifying income over £50,000, requiring digital records and quarterly updates. Practices need to segment affected clients now, plan for a four-times-a-year workload instead of once a year, choose compatible software, and reprice accordingly.
Key takeaways
- MTD for Income Tax applies from April 2026 to sole traders and landlords with qualifying income over £50,000.
- Segment your client list now by income level and income type to know exactly who is affected and when.
- Quarterly updates mean four submission events a year per client instead of one annual return.
- Digital records are mandatory — clients on paper or basic spreadsheets need a plan to move across before their first quarter.
- Pricing needs to reflect the extra quarterly workload; a single annual fee that ignores this will erode margin.
What is Making Tax Digital for Income Tax?
MTD for Income Tax requires qualifying sole traders and landlords to keep digital records and send quarterly updates to HMRC, with an annual final declaration replacing part of the self assessment return.
From April 2026, sole traders and landlords with qualifying income over £50,000 must keep digital records of their business income and expenses and submit quarterly updates through MTD-compatible software, followed by a final declaration after the tax year ends.
Who is affected and when do they need to comply?
Sole traders and landlords with qualifying income over £50,000 must comply from April 2026; lower thresholds are expected to be phased in later.
Qualifying income means gross income from self-employment and property, combined, before expenses. A client with two smaller income streams that together exceed the threshold is still in scope, which is easy to miss if you assess each source separately.
How should a practice segment its client list for MTD?
Group clients by whether they're in scope, close to the threshold, or clearly out of scope, and separately by how ready their current record-keeping is.
| Segment | Description | Action |
|---|---|---|
| Clearly in scope | Qualifying income comfortably over £50,000 | Move to digital records and quarterly process now |
| Borderline | Income close to the threshold, may fluctuate year to year | Monitor each year, prepare in case they tip over |
| Currently on paper/basic spreadsheets | No digital bookkeeping system in place | Migrate before their first mandatory quarter, don't wait until the deadline |
| Out of scope for now | Income well under threshold | No action needed yet, but review annually |
How does quarterly workload change practice planning?
Instead of one annual self assessment push, affected clients now generate four submission deadlines a year, spreading workload but multiplying the number of deadline events.
A practice with 60 affected clients moves from 60 annual deadline events to 240 quarterly ones, plus the final declarations. That's not necessarily more total work, but it is a very different rhythm — smaller, more frequent chases rather than one big January push — and it needs planning as such, not just extra capacity thrown at January.
What software do clients need for MTD for Income Tax?
Clients need software that is MTD-compatible for Income Tax, whether that's dedicated bookkeeping software, a spreadsheet with bridging software, or a system the practice provides.
For clients who are currently comfortable with a simple spreadsheet, bridging software can be a lower-friction stepping stone into compliance than moving them onto a full bookkeeping package immediately, though a full system tends to be more sustainable in the long run.
How should practices price for MTD for Income Tax work?
Fees should reflect four submissions a year plus the final declaration, not be left at the old annual self assessment rate.
It's tempting to absorb the extra quarterly work into an existing annual fee to avoid a difficult conversation with clients, but that quietly erodes margin across every affected client. Better to reprice transparently, explaining the extra work involved, well before the client's first mandatory quarter.
What should a practice do to get ready now?
Segment clients, choose your software approach, communicate with affected clients early, and reprice before the first mandatory quarter lands.
- Identify every client with qualifying income over £50,000, combining self-employment and property income.
- Flag borderline clients whose income might cross the threshold.
- Assess each in-scope client's current record-keeping and plan a migration route.
- Decide which MTD-compatible software you'll standardise on, or support multiple options.
- Write to affected clients explaining what's changing and why, well ahead of April 2026.
- Reprice affected clients to reflect quarterly submissions.
- Build the quarterly workflow into your job templates so it's routine, not a one-off project.
How Remindoo helps
MTD for Income Tax turns one annual deadline into four quarterly ones per affected client, which is exactly the kind of volume increase that breaks manual tracking. Remindoo's automated reminders and trigger dates mean each client's quarterly update deadlines are scheduled once and then tracked automatically, rather than relying on someone remembering which of dozens of clients has a quarter due this month. Recurring tasks and service templates let you build the quarterly MTD process once — records requested, digital records reviewed, update submitted — and apply it consistently across every in-scope client, so the extra workload becomes a routine job type rather than a recurring scramble. As thresholds potentially widen in future years, having that structure already in place means bringing more clients into the process is a matter of applying an existing template, not building a new one from scratch.
Frequently asked questions
When does MTD for Income Tax start?
MTD for Income Tax applies from April 2026 for sole traders and landlords with qualifying income over £50,000.
What counts as qualifying income for MTD?
Qualifying income is gross income from self-employment and property combined, before expenses, so multiple smaller income sources can still push a client over the threshold.
Do clients still file a self assessment return under MTD?
The quarterly updates and a final declaration replace the relevant part of the self assessment return for the income sources in scope, rather than running alongside a full separate return.
Can a spreadsheet still be used under MTD for Income Tax?
Yes, provided it's combined with bridging software that can submit the required digital updates to HMRC; a spreadsheet alone without bridging software is not compliant.
Should fees change because of MTD for Income Tax?
Yes, in most cases — four quarterly submissions plus a final declaration is materially more work than one annual return, and fees should reflect that.
What happens if a client's income later drops below the threshold?
Ongoing rules for moving out of MTD once income falls should be checked against current HMRC guidance, as thresholds and exit rules can be reviewed over time.
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Sources
Last updated 23 September 2026. General guidance, not legal or regulatory advice. Check with your professional body.
