The Spring Statement has confirmed that the Making Tax Digital for Income Tax (MTD for IT) regime will be extended to smaller businesses. Read on to find out how and when your business may be affected.

What is MTD for IT?

Making Tax Digital for Income Tax (MTD for IT) is a government initiative requiring self-employed individuals and landlords who earn above a certain threshold to maintain digital records and submit quarterly tax updates to HM Revenue and Customs (HMRC) using compatible software.

Who must comply with MTD for IT?

The new rules will be mandatory from 6 April 2026 for sole traders and property landlords whose trade and rental income exceeded £50,000 in the 2024/25 tax year.

The threshold will then reduce, meaning that from 6 April 2027, sole traders and property landlords earning over £30,000in the 2025/26 tax year will also fall under MTD for IT requirements.

Additionally, the Spring Statement has confirmed that the threshold will drop further—from 6 April 2028, those earning over £20,000 in the 2026/27 tax year will also need to comply.

Changes to Tax Return Submissions

If you are required to use MTD for IT, your end-of-year tax return must also be submitted using MTD-compatible software. The free HMRC online service will no longer be an option.

What Should You Do Next?

This may require significant changes to how you manage your accounting records. If you need guidance, we’re here to help. Get in touch for advice, recommendations, and training to ensure a smooth transition with minimal hassle.