With just over a year remaining before Making Tax Digital for Income Tax (MTD for IT) becomes mandatory, now is the time to assess whether your business will need to comply with the new requirements from 6 April 2026.

If you are a sole trader or operate an unincorporated property business, and your ‘qualifying income’ (typically turnover from a sole trade or property business) is £50,000 or more in the 2024/25 tax year, you will be required to join MTD for IT from 6 April 2026. It’s too soon to determine your 2024/25 income until your accounts or tax return have been completed for that tax year, but your 2023/24 self-assessment tax return should provide an indication of whether you will be mandated. If your qualifying income in 2023/24 was above or approaching £50,000, and you anticipate it remaining at that level or increasing for 2024/25, there is a strong likelihood that you will be mandated.

HMRC is following this approach. They have confirmed that they will use 2023/24 returns (due by 31 January 2025) to identify taxpayers who are likely to be mandated from 6 April 2026. In the coming months, they will send letters to those taxpayers, informing them that they are expected to be mandated and explaining the reasoning behind this.

If you receive such a letter, or if you would like further guidance on preparing for MTD for IT, please get in touch. MTD for IT requires maintaining detailed accounting records in compatible software and submitting quarterly digital reports to HMRC. While this may be a significant change for some, it could also bring advantages. We can assist you in selecting the most suitable software and implementing the necessary processes in a way that adds value to your business.