What is MTD for Income Tax (IT)?
MTD for IT is part of HMRC’s digital strategy to modernise the UK tax system. Instead of filing one annual tax return, individuals must now:
- Keep digital records of income and expenses
- Submit quarterly updates to HMRC
- Complete a Final Declaration at the end of the tax year (formerly the Self-Assessment Return)
Key Changes Coming in 2026
Here’s how the old vs. new tax process compares:
| Old System | New MTD System | |
|---|---|---|
| Submission | Once annually | 4 quarterly + 1 annual |
| Record Keeping | Manual or spreadsheet-based | Must be digital |
| Software | Optional | Required (HMRC-approved) |
Who Does This Apply To?
MTD for Income Tax applies to:
- Self-employed individuals with over £50,000 turnover (April 2026)
- Landlords with over £50,000 rental income
- Landlords & Self-employed individuals with a combined ****income of £50,000
- From April 2027, the threshold drops to £30,000
Note: This is based on total income across your trades and properties, not profit.
MTD Submission Dates to Remember
You’ll submit data four times per year:
| Period Ends | Submission Deadline |
|---|---|
| 30 June | 7 August |
| 30 Sept | 7 November |
| 31 Dec | 7 February |
| 31 March | 7 May |
A final declaration is due by 31 January following the end of the tax year.
What You Need to Do Now
1. Choose the Right MTD Software
Nuvo recommends starting with MTD software before it’s legally required. You could even use the software to submit your 2024–25 data. That way, you’re not learning under pressure.
Top options:
- FreeAgent (ideal for landlords)
- Xero Simple Start (perfect for sole traders)
2. Open a Separate Business Bank Account
Especially for landlords and sole traders, this simplifies:
- Record-keeping
- Audits
- Tax-deductible expense tracking
3. Practice Now With Trial Submissions
You can start using the software to track and submit 2024–25 tax data to your accountant. This builds confidence and helps you resolve teething issues early.
4. Talk to Your Accountant Early
Don’t assume your accountant will take care of everything automatically. MTD shifts responsibility to you to keep up-to-date digital records and submit quarterly.
What Happens If You Miss Submissions?
HMRC will use a penalty points system:
- 1 point for each missed update
- 4 points = £200 fine
Missing multiple quarters could add up fast. Start now to avoid this risk.
Final Word: This Isn’t Just a Tax Change, It’s a Business Opportunity
MTD isn’t designed to make your life harder. It’s a chance to:
- Streamline your record-keeping
- Gain real-time visibility into your finances
- Avoid last-minute panic during tax season
Start using your MTD software now to turn compliance into a business advantage. And if you need help? The Nuvo team is here with training, tools, and advice that actually helps you.
Are you ready for MTD?
We’ve built a free ScoreApp assessment to help you find out whether you’re on track to ace the new tax guidance 2026.
Or book a discovery call to chat through how MTD could change your tax returns in the upcoming tax year.
