MTD will be the new way that HMRC want to transform tax administration so that it is easier for taxpayers to get their tax right. Or at least, that is the image that HMRC would like to portray.
So, what is changing?
MTD will replace the current system of an annual (once a year) Self-Assessment tax return. Instead, those caught by MTD will have to submit four quarterly updates about their business income and expenses. In addition to submitting a final declaration at the end of the tax year.
Who will be caught by MTD
From 6th April 2026, any self-employed individuals and landlords with a total business and/or property income over £50,000 per year.
From 6th April 2027, any self-employed individuals and landlords with a total business and/or property income over £30,000 per year.
From 6th April 2029, any self-employed individuals and landlords with a total business and/or property income over £20,000 per year. (The 2029 date is the latest date and could be changed to an earlier date in the next budget).
Please note that as of February 2025, Partnerships are currently excluded from MTD. Therefore, any ‘partnership profits’ are NOT caught by MTD. HMRC will bring Partnerships into MTD at some point in the future and these changes will be announced in the annual Budget.
If I’m caught by MTD, what do I have to do?
To start with you’ll have to keep digital records of all your business and/or rental income and expenses, these digital records will need to be on MTD compatible software.
You’ll also have to send quarterly updates to HMRC using the MTD compatible software. These updates will be a summary of your business and/or rental income and expenses.
Predictably there are deadlines (and unsurprisingly penalties for late returns) for submitting the quarterly updates and these will be the same for everyone who is caught by MTD. With effect from the 6th April 2026 (6th April being the start of the tax year), these deadlines will be:
- 7th August
- 7th November
- 7th February
- 7th May
At the end of the tax year, you’ll have to finalise your tax position and submit a final declaration (this replaces the annual Self-Assessment tax return). This declaration allows you to confirm the updates are correct or require amending in addition to adding any other taxable income or reliefs that are not included in the quarterly updates. As with the current Self-Assessment process, you’ll have until the 31st January of the following tax year submit the final declaration and pay the tax due.
If you have any questions, please get in touch with the tax team who will be happy to help.
Trusts, IHT and estate planning 
Xero Gold Partners 
Business services 
Corporate tax 
