If you’re a sole trader or a landlord in the UK, you’ve probably heard about Making Tax Digital for Income Tax (MTD for IT). This isn't just another tax change - it’s a fundamental shift in how you’ll report your income to HMRC. The good news? It's all about making things simpler in the long run, and getting prepared now is the key to a stress-free transition.
What Exactly Is MTD for IT?
Starting in April 2026, MTD for IT will replace the traditional annual self-assessment tax return for many sole traders and landlords. Here’s what will change:
- Digital Records: You'll need to keep digital records of all your business income and expenses. This moves you away from paper receipts and towards a more organized, digital system.
- Quarterly Updates: Instead of one annual return, you'll send a summary of your income and expenses to HMRC every three months. Don’t worry, these aren't full tax returns—they're just a few numbers that give HMRC a snapshot of your business.
- Annual Final Declaration: At the end of the tax year, you’ll submit a final declaration to HMRC, which will replace your current self-assessment.
The goal is to provide you with a clearer, more real-time view of your finances, help you stay on top of your tax obligations, and reduce common errors.
Starting in April 2026, MTD for IT will replace the traditional annual self-assessment tax return for many sole traders and landlords. Here’s what will change:
- Digital Records: You'll need to keep digital records of all your business income and expenses. This moves you away from paper receipts and towards a more organized, digital system.
- Quarterly Updates: Instead of one annual return, you'll send a summary of your income and expenses to HMRC every three months. Don’t worry, these aren't full tax returns—they're just a few numbers that give HMRC a snapshot of your business.
- Annual Final Declaration: At the end of the tax year, you’ll submit a final declaration to HMRC, which will replace your current self-assessment.
The goal is to provide you with a clearer, more real-time view of your finances, help you stay on top of your tax obligations, and reduce common errors.
Are You Affected?
MTD for IT will be rolled out in phases, so not everyone needs to act at once.
- April 2026: It becomes mandatory for sole traders and landlords with an annual gross income (your turnover or sales, not profit) over £50,000.
- April 2027: This will extend to those with an annual gross income over £30,000.
If your income is below these thresholds, you are not currently required to join, but you can always register voluntarily to get a head start.
MTD for IT will be rolled out in phases, so not everyone needs to act at once.
- April 2026: It becomes mandatory for sole traders and landlords with an annual gross income (your turnover or sales, not profit) over £50,000.
- April 2027: This will extend to those with an annual gross income over £30,000.
If your income is below these thresholds, you are not currently required to join, but you can always register voluntarily to get a head start.
Why Act Now?
While the deadline for many is in 2026, preparing now is crucial. Starting early gives you a "dummy run" to get comfortable with the new process before it becomes mandatory. This is your chance to:
- Improve Financial Clarity: With quarterly reporting, you get a much clearer, up-to-date picture of your business's performance. You can see your financial position and make better decisions.
- Save Time & Avoid Surprises: Keeping digital records makes your year-end tax return a breeze. You'll also have a better idea of your tax liability throughout the year, so there are no nasty surprises.
- Never Lose a Receipt Again: Digital tools help you capture all your costs, ensuring you don’t miss out on any valuable claims.
While the deadline for many is in 2026, preparing now is crucial. Starting early gives you a "dummy run" to get comfortable with the new process before it becomes mandatory. This is your chance to:
- Improve Financial Clarity: With quarterly reporting, you get a much clearer, up-to-date picture of your business's performance. You can see your financial position and make better decisions.
- Save Time & Avoid Surprises: Keeping digital records makes your year-end tax return a breeze. You'll also have a better idea of your tax liability throughout the year, so there are no nasty surprises.
- Never Lose a Receipt Again: Digital tools help you capture all your costs, ensuring you don’t miss out on any valuable claims.
Zoho Books: Your Free, MTD-Compliant Solution
Navigating these changes can seem daunting, but it doesn't have to be. Zoho Books is an HMRC recognised accounting software that's fully compliant with MTD for IT. Best of all, they offer a completely free plan for sole traders that includes everything you need to comply.
With Zoho Books, you can:
- Easily Track Income & Expenses: Go paperless by simply taking a photo of your receipts with your phone—the app automatically scans and records the details.
- Connect Directly to HMRC: Once authorized, Zoho Books fetches your quarterly obligations from HMRC and helps you submit your updates with just a few clicks.
- Automate Your Bookkeeping: From automated bank feeds to recurring invoices and payment reminders, Zoho Books handles the repetitive tasks so you can focus on your business.
This isn’t a limited-time free trial; it’s a robust solution designed to support your business as it grows. By starting with Zoho Books now, you can get ahead of the curve, ensure full compliance, and turn a daunting requirement into an opportunity for a more efficient business.
Navigating these changes can seem daunting, but it doesn't have to be. Zoho Books is an HMRC recognised accounting software that's fully compliant with MTD for IT. Best of all, they offer a completely free plan for sole traders that includes everything you need to comply.
With Zoho Books, you can:
- Easily Track Income & Expenses: Go paperless by simply taking a photo of your receipts with your phone—the app automatically scans and records the details.
- Connect Directly to HMRC: Once authorized, Zoho Books fetches your quarterly obligations from HMRC and helps you submit your updates with just a few clicks.
- Automate Your Bookkeeping: From automated bank feeds to recurring invoices and payment reminders, Zoho Books handles the repetitive tasks so you can focus on your business.
This isn’t a limited-time free trial; it’s a robust solution designed to support your business as it grows. By starting with Zoho Books now, you can get ahead of the curve, ensure full compliance, and turn a daunting requirement into an opportunity for a more efficient business.
Ready to get ahead of the MTD deadline?
See for yourself how easy it is to manage your finances and get MTD-ready with Zoho Books.
Start your free trial today and discover the full power of Zoho Books.
See for yourself how easy it is to manage your finances and get MTD-ready with Zoho Books.
Start your free trial today and discover the full power of Zoho Books.