Making Tax Digital (MTD) for Income Tax comes into effect from April 2026 so now is the time to check whether you’re affected and start putting the right systems in place.
If you’re a landlord or self-employed with qualifying income, preparation is key and the good news is, you don’t have to do it alone.
Step 1: Check & Prepare
Are you affected?
You’ll be required to join MTD for Income Tax if your combined annual income from property and/or self-employment exceeds £50,000. This includes income from multiple rental properties and any additional self-employed activities.
If you’re close to the threshold, it’s still worth preparing early so there are no last-minute surprises.
Get your records in order
MTD is all about digital record keeping. From your MTD start date:
- All income sources must be identified (including jointly owned properties and side businesses)
- Records must be kept digitally, paper records alone will no longer be compliant
This is a good opportunity to review how your records are currently kept and tidy up any gaps.
Access HMRC online services
To get started, you’ll need:
- A Government Gateway user ID and password
- Access to your HMRC online tax account
Without this, you won’t be able to register for MTD or connect your software.
Step 2: Choose the Right Software
Use HMRC-approved software
MTD requires you to use software that can connect directly to HMRC. Popular options include Xero, QuickBooks and FreeAgent, though the right choice depends on how your rental business is structured.
We’re happy to help you choose a system that suits your needs and avoids paying for features you don’t need.
Set up digital record keeping
Your software must be set up to:
- Record income and expenses digitally
- Maintain accurate, up-to-date records throughout the year
Once configured properly, this can actually save time and reduce errors.
Prefer spreadsheets?
You can continue using spreadsheets but with one important caveat. You’ll need bridging software to digitally link your spreadsheet to HMRC. Manual copying and pasting is not permitted under MTD rules.
Step 3: Register for MTD with HMRC
Sign up via GOV.UK
Once your records and software are ready, you’ll need to register for MTD:
- Log in using your Government Gateway details
- Provide key information such as your National Insurance number, business details and accounting period
HMRC confirmation
HMRC will usually confirm your registration within 72 hours, after which you can begin using MTD-compliant systems.
Step 4: Connect Your Software to HMRC
Grant authority
Your chosen software must be authorised to communicate directly with HMRC. This is often referred to as “granting authority” and allows submissions to be made securely on your behalf.
Security check
HMRC also requires Two-Step Verification to be enabled on your Government Gateway account, adding an extra layer of protection.
Step 5: Ongoing MTD Reporting
Keep digital records up to date
Under MTD, records should be kept as transactions happen, rather than being left until year-end. This makes reporting far more straightforward.
Quarterly submissions
Instead of one annual tax return, you’ll submit quarterly summaries of income and expenses to HMRC through your software.
Year-end declaration
At the end of the tax year, a final declaration is submitted via your software, replacing the traditional Self Assessment tax return.
How we can help
MTD is a significant change but it doesn’t have to be a headache.
We can oversee the entire process for you, from checking eligibility and choosing the right software to registration, setup and ongoing submissions. Most importantly, we’ll make sure everything is in place and compliant by April, if you’re eligible.
📞 01865 817170
✉️ admin@richardrileyassociates.co.uk
Get in touch today and let us take the stress out of Making Tax Digital.