Making Tax Digital
In last months Agent Update, HMRC highlighted that they will shortly be sending out letters to taxpayers whose 2023/24 tax returns suggest they may be mandated into Making Tax Digital for Income tax from 6 April 2026.
The below correspondence has been or will be sent out to every client who, based on their 2023/24 income, had gross rental and/or sole trade turnover in excess of £40,000, and will be followed up in coming months to offer support during this significant change.
If you deal with anyone affected, please make yourself familiar with the FAQ’s linked below, or if you have any questions, reach out to Daniel Rodger or your local Personal Tax team.
As you may be aware, HMRC are introducing Making Tax Digital (“MTD”) from 6 April 2026, a new reporting system which is mandatory for sole traders and landlords who have a total gross income in excess of £50,000 (before expenses and combined if arising from both sources of income). We are sending this to you as you met or were close to meeting the criteria based on your 2023/24 income, however your eligibility will be based on your income in the 2024/25 tax year.
If you meet the criteria in 2024/25, you will be required to submit four quarterly returns online as well as a final declaration each year, which includes all of your other income not covered by MTD. This will replace your Self Assessment Return. We must ensure that you are using an appropriate digital record keeping system that is compatible with MTD submissions.
We will be in touch with you over the coming months to discuss how we can assist you with your transition into MTD, whether it’s with compatible software, or additional support from us at a price point that works for you.
The Association of Taxation Technicians has provided a series of frequently asked questions (“FAQs”) relating to the new MTD regime. We suggest you read through these carefully so that you fully understand the changing requirements. You can read the FAQs at Making Tax Digital – Frequently Asked Questions | The Association of Taxation Technicians
Following the budget, we have also released a summary page on our website here: Spring Statement 2025: Making Tax Digital | East & South East | Affinia
The first year for these submissions will be 2026-27, i.e. the year from 6 April 2026 to 5 April 2027 and the relevant dates are as follows:
| Submission period | Due date | Notes |
| 6 April 2026 to
5 July 2026 |
7 August 2026 | A “calendar quarter election” can be made so that submissions are made to 30 June, 30 September, 31 December and 31 March annually. |
| 6 July 2026 to
5 October 2026 |
7 November 2026 | If an election is made, the due date for the submissions will be the same, i.e. the 7th of the month shown opposite. |
| 6 October
2026 to 5 January 2027 |
7 February 2027
|
|
| 6 January 2027
to 5 April 2027 |
7 May 2027
|
|
| Digital tax return | ||
| 6 April 2026 to
5 April 2027 |
31 January 2028 | This is similar to the current self-assessment return, but will be pre-populated with data from the quarterly submissions already filed. |
Penalties for late submissions for taxpayers within MTD will move to a points based system, similar to the rules for VAT. Taxpayers in MTD will receive a point each time they miss a submission deadline. Points accumulate until a threshold is reached, at which point a £200 penalty will be issued. From that point onwards, any further late submissions will result in an immediate £200 penalty. To reset the penalty position, the taxpayer will need a period of compliance of at least a year and to have submitted all returns required for the previous 24 months.
HMRC are trialling a testing period throughout 2025/26. Taking part could help you get to grips with the digital record keeping and quarterly reporting requirements before they become mandatory. You can sign up at any time during the 2025/26 year and penalties will not apply during this testing period. If you would be interested in this, please let us know.
Many thanks,
Daniel Rodger