Making Tax Digital UK: Key Things You Must Know

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I know you’ve probably been hearing a lot about Making Tax Digital (MTD) lately.

But for many people, it’s still not entirely clear what it means or whether it actually applies to them.

If you are self-employed or earn income from property in the UK, this is something you need to understand properly.

Making Tax Digital (MTD) in the UK is changing how individuals report their income. While it may not apply to everyone immediately, knowing where you stand now can help you avoid confusion later. So let’s begin.

What is Making Tax Digital (MTD)?

Making Tax Digital (MTD) is a UK government initiative designed to make tax reporting more accurate, efficient, and digital.

Instead of relying on manual records and a single annual submission, MTD introduces a system where financial records are kept digitally and submitted more regularly.

It is already in place for VAT-registered businesses and is now being extended to cover Income Tax.

Who Does Making Tax Digital Apply To?

From 6 April 2026, Making Tax Digital for Income Tax will apply to individuals who earn income through self-employment or property. This includes sole traders running their own businesses and landlords receiving rental income.

Whether you are required to comply depends on your qualifying income i.e., your combined gross income (before expenses) from self-employment and/or property in a specific tax year.

HMRC determines eligibility based on the Self Assessment tax return due on 31 January immediately before the MTD start date. For the first phase beginning in April 2026, the qualifying year is 2024/25, since that return is due by 31 January 2026. If your qualifying income for 2024/25 exceeds £50,000, you will be required to use MTD from 6 April 2026.

When Will Making Tax Digital Apply to You?

When you are required to start using Making Tax Digital depends on your qualifying income within a specific tax year.

The rollout is being introduced in phases:

• If your qualifying income is over £50,000 in the 2024–2025 tax year, you may need to comply from April 2026
• If your qualifying income is over £30,000 in the 2025–2026 tax year, you may need to comply from April 2027
• If your qualifying income is over £20,000 in the 2026–2027 tax year, you may need to comply from April 2028

This phased approach means that more individuals will be brought into the system over time.

Understanding where you fall within these thresholds is important, as it determines when your reporting obligations will change.

How Does Making Tax Digital Change Tax Reporting?

Once MTD applies to you, the way you manage and report your income will change.

Instead of filing once a year, you will be expected to keep digital records and submit updates more regularly throughout the year.

In practice, this means:

• Maintaining digital records of your income and expenses
• Submitting updates to HMRC every quarter
• Filing a final declaration at the end of the year

This shift moves tax reporting from a once-a-year task to an ongoing process that requires consistency and organisation.

How to Prepare for Making Tax Digital

The best way to approach MTD is to prepare early. This starts with ensuring your financial records are organised and up to date. Moving towards digital record-keeping, if you have not already done so, is an important step.

It is also important to understand your reporting obligations and confirm whether your income meets the required threshold.

Taking these steps early reduces the risk of last-minute pressure and helps you stay in control of your financial position.

Need Help Understanding What Applies to You?

At Levrion Consulting, we help individuals and businesses understand their obligations and stay compliant without unnecessary stress.

If you are unsure whether Making Tax Digital applies to you, or how to prepare, feel free to reach out.

We will guide you through it.