Making Tax Digital for Income Tax. Had a letter from HMRC? Here is what it actually means, and how we can help.
Does this apply to me?
The threshold is based on your combined gross turnover from self-employment and property income, that is your total income from those sources before any expenses are deducted. If the combined figure from both exceeds £50,000, MTD applies from April 2026.
It is the combined figure that catches many people out. A sole trader earning £35,000 from their business and £18,000 from a rental property has a combined gross turnover of £53,000 and is in scope, even though neither income stream on its own would reach the threshold. Employment income, pension income, and dividends do not count toward the threshold.
This is such a helpful breakdown, HMRC letters have a real talent for being technically accurate and completely unclear at the same time.
The distinction between turnover and profit alone is the kind of thing that catches people off guard. Really useful to see it explained plainly.
Daria Kulesha
Not sure where you sit?
We can check your position based on your 2024/25 figures and confirm whether MTD applies to you, and from when. Get in touch with your usual advisor or use the contact form below.
Farming clients, an important note
If you are a farmer who uses profit averaging, you have an additional year before MTD applies to you. Farmers who may reasonably expect to use profit averaging are entitled to a deferral until April 2027, following a successful campaign by the NFU. This is a meaningful concession and worth understanding before you take any action, if this might apply to you, speak to your advisor before doing anything else.
Coming in from April 2027
If your combined gross turnover is between £30,000 and £50,000, MTD does not apply to you yet, but it will from April 2027. It is worth starting to think about this now rather than waiting until the deadline is close. We are already working with clients in this bracket to get them set up ahead of time, and we are happy to have that conversation early if it would help.
Key dates
| Date | What happens |
| 6 April 2026 | MTD for IT begins for sole traders and landlords with combined gross turnover over £50,000 |
| 7 August 2026 | First quarterly update due (covering 6 April – 5 July 2026) |
| 7 November 2026 | Second quarterly update due |
| 31 January 2027 | Final Declaration due (replacing Self-Assessment for 2025/26) |
| 7 February 2027 | Third quarterly update due |
| 7 May 2027 | Fourth quarterly update due |
| 6 April 2027 | MTD extends to those with combined gross turnover over £30,000 |
| 6 April 2028 | MTD extends to those with combined gross turnover over £20,000 |
Get in touch
Have a question about MTD? Whether you’re not sure if it applies to you, want to understand the process, or are ready to get started, our dedicated MTD team is happy to help. Get in touch at MTD@wrpartners.co.uk
Making Tax Digital
Frequently asked questions
Does MTD for IT replace my Self Assessment return entirely?
Yes, for the income covered by MTD. The annual Self Assessment return is replaced by the Final Declaration, which you submit by 31 January each year. The quarterly submissions feed into that declaration throughout the year, so by the time January comes around most of the work is already done. If you have other income that falls outside MTD, such as employment income, that will still be captured through the Final Declaration in the usual way.
I'm not sure whether this applies to me. How do I find out?
The threshold applies to your combined gross turnover from self-employment and property income, before any expenses are deducted. If your total from those two sources exceeds £50,000, MTD applies from April 2026. If it is between £30,000 and £50,000, you will be brought in from April 2027. If you have a mix of income types and are not certain where you sit, get in touch and we will check your position based on your 2024/25 figures.
What software do I need?
We use Xero as our preferred software for MTD clients. We will set you up, connect your bank feed, and make sure everything is properly linked to HMRC before your first submission is due. You cannot use a standard spreadsheet unless it is connected to bridging software, and in our experience, setting clients up properly on Xero from the start is significantly simpler and less prone to errors than bridging solutions.
What happens if I miss a quarterly deadline?
HMRC operates a penalty points system for late quarterly submissions. Each missed deadline adds a point to your record, and once you reach a threshold a financial penalty applies. In 2026/27, the first year of MTD, HMRC will not issue penalty points for late quarterly updates, so there is some breathing room while people adjust. That grace period does not apply to late payment or the Final Declaration. If we are managing your submissions, missed deadlines are not something you need to worry about.
Can I manage MTD myself?
Technically yes, HMRC-compatible software allows you to submit directly. But keeping accurate digital records consistently across four quarterly deadlines is more involved than the annual Self Assessment routine most people are used to, and the consequences of getting it wrong sit with you. Where we add real value is not just in handling the submissions themselves, but in the support that comes with being a WR Partners MTD client, including regular drop-in sessions where you can speak directly with one of our MTD experts. If full management is not what you need right now, we can also help you get set up on Xero and build your confidence with the process from there.
What do you need from me, and how often?
Once you are set up on Xero with your bank feed connected, your main job is keeping your records up to date, uploading invoices and receipts as they come in, either through the Xero mobile app, by email, or by logging in online. We ask that everything for each quarter is with us by the 10th of the month following the quarter end. From there, we do the review and preparation work, then send you a summary to approve before anything goes to HMRC. Most clients find the routine straightforward once it is in place.
My income is a mix of employment and self-employment. Does MTD still apply?
MTD for IT covers your self-employment and property income only. Employment income taxed through PAYE is not included in the quarterly submissions. However, your Final Declaration will still bring everything together at the end of the year, including your employed earnings. If your self-employment or property turnover is over the threshold, MTD applies to those elements regardless of what else you earn.
I haven't done anything yet. Is it too late?
No. HMRC’s soft landing means there are no penalty points for late quarterly submissions in the first year, so you have some breathing room. That said, the sooner you are set up with the right software and processes in place, the smoother the transition will be. If you are starting from scratch, we can get you organised quickly. Get in touch and we will work out where you are and what needs to happen next.
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Or if you’d prefer to speak to someone directly just give us a call on: 08000 664 664 or email: hello@wrpartners.co.uk.
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