1. What is MTD IT?

MTD IT (Making Tax Digital for Income Tax) is part of HMRC’s initiative to modernise the tax system. It requires self-employed individuals and landlords to keep digital records of their income and expenses and submit quarterly updates to HMRC using MTD-compatible software.

2. Who does MTD IT apply to?

MTD IT applies to:

•Self-employed individuals and landlords with annual business or property income exceeding £50,000 from April 2026.  Note this is turnover, not profit, and is combined across all your trades/property.

•Those earning between £30,000 and £50,000 will need to comply from April 2027.

Future plans for individuals earning below £30,000 are still under consultation.

3. When does MTD IT start?

•April 2026: For individuals earning over £50,000 annually.  This will be based on your 24/25 tax return data.

•April 2027: For individuals earning between £30,000 and £50,000 annually.

4. What records do I need to keep digitally?

You’ll need to maintain digital records of:

•Income

•Expenses

•Bank transactions related to your business or property

These records must be stored in MTD-compatible software and submitted to HMRC via quarterly updates.

5. How often do I need to report under MTD IT?

You’ll need to submit:

•Four quarterly updates summarising your income and expenses throughout the year.

•An End of Period Statement (EOPS) at the end of the tax year to confirm your figures.

•A Final Declaration to declare all your income and confirm your tax liability.  This will replace what is currently your annual self-assessment tax return.

6. What software do I need for MTD IT?

You’ll need MTD-compatible software to manage your records and submit updates.

We will help you choose the best software for your needs and set it up for you.

7. What happens if I don’t comply with MTD IT?

Failure to comply with MTD IT requirements may result in penalties from HMRC. These could include fines for late submissions or non-compliance with digital record-keeping rules.

8. Do I still need to file a Self Assessment tax return?

No, MTD ITSA replaces the traditional annual Self Assessment tax return. Instead, you’ll submit quarterly updates, an EOPS, and a Final Declaration through your MTD-compatible software.

9. How can Kennedy Accountancy help me with MTD IT?

We provide:

•Expert advice tailored to your situation.

•Setup and training for MTD-compatible software.

•Assistance with quarterly updates and year-end submissions.

•Ongoing support to ensure compliance and peace of mind.

10. What should I do now to prepare for MTD IT?

•Speak to an expert to make a plan!

Still Have Questions? We’re Here to Help!

We know this a huge change (and a huge pain, let’s face it) so get in touch if you need help.  If you are already a Kennedy Accountancy client then do not worry as we will be reaching out to you to make a plan.