If your income was under £50,000, MTD will not apply until either April 2027 or April 2028, depending on your level of income in 2025/26 and 2026/27. In time, it will affect most self-employed individuals as HMRC moves to a fully digital reporting system.

If you are a medical health professional with self-employed or rental income over £50,000, it is very likely you will be affected.

MTD requires you to keep digital records and provide quarterly updates on your income and expenditure to HMRC through MTD-compatible software, as well as a final declaration. This includes your, self-employed income, rental income if applicable, professional fees, insurance - most things you’d typically include in your annual self-assessment tax return

Preparing for MTD

You might be thinking: “So, what does this actually mean, and what do I do?”

You won’t be alone.

Firstly, consider when to register for MTD. Registration can be tricky, and you need to ensure you're eligible. Registering too early or registering incorrectly can have ongoing consequences, as opting out is generally not an option. Professional support from the outset ensures everything is established correctly from day one, saving time, reducing risk and keeping compliance on track.

You may also want to investigate HMRC-approved, MTD-compatible software. You will use this to record your income and expenses - for example, Xero, Sage or QuickBooks. Again, your accountant should be able to help here or even offer their own solution.

Lastly, don’t worry. While change can be daunting, and MTD represents a huge shift in the tax compliance system, it is manageable. With some preparation, professional support and understanding, the change could even be beneficial, giving you year-round insights into your earnings and reducing the stress of filing your traditional annual tax return.

In summary, MTD will change how you do your taxes.

You will:

report more frequently to HMRC, sending updates four times a year, along with a final end of year adjustment as opposed to one annual filing
be required to use MTD-compliant software to record and report your income and expenses.

However, you won’t pay any more tax than you would have done before MTD, and you won’t pay tax any earlier (or four times a year), nor will you be required to submit the equivalent of four full tax returns a year.

Learn more about specialist tax and accountancy services offered as part of membership with the MDU.

Making Tax Digital (MTD) for Income Tax: what you need to know