Making Tax Digital (MTD) for Income Tax is Coming

Starting April 2026, the way you report your income to HMRC is changing. This new legislation affects Self-Employed individuals and landlords with a total business or property income above £50,000.

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MTD from April 2026

What’s Changing?

Quarterly Updates

Quarterly Updates

You must now provide digital updates every three months.

Digital Record Keeping

Digital Record Keeping

Using HMRC-compatible software is mandatory to track your income and expenses.

Annual Finalisation

Annual Finalisation

While you submit quarterly updates, your annual tax return still needs to be filed by an accountant at the end of the year.

Quarterly Updates

Quarterly Updates

You must now provide digital updates every three months.

Digital Record Keeping

Digital Record Keeping

Using HMRC-compatible software is mandatory to track your income and expenses.

Annual Finalisation

Annual Finalisation

While you submit quarterly updates, your annual tax return still needs to be filed by an accountant at the end of the year.

Self-Employed

Are you Self-Employed or a Landlord?

The way you do tax is changing, so make sure you’re up to date.

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Why Choose
123 Easy Books?

We specialise in making the “MTD for IT” process simple, ensuring you stay compliant without the headache of managing complex software alone.

  • Expert support when you need us the most
  • We take the stress out of compliancy
  • We specailise in making tax digital

Contact 123 today to get your digital records started...

Call us on 01376 500888 or email us at enquiries@123easybooks.co.uk

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123 Easy Books offers three tiers of support to make this transition stress-free and as easy as 123

All plans require a Xero Simple subscription, starting from £7/month (paid separately) to ensure your records are HMRC-compliant.

£175 One-off training fee
Get started with the right tools and setup.

£150 One-off training fee + from £60/quarter
You manage your own bookkeeping, and we provide a professional quarterly review.

From £120/quarter
Total peace of mind. We take care of everything.

Frequently Asked Questions

Find out more about what Making Tax Digital is all about.

MTD

Yes, for sole traders and landlords who reach the turnover threshold. Instead of one annual tax return, you’ll submit four quarterly updates and one final declaration using your HMRC-recognised software. It’s the same information, just spread out through the year.
Not to comply with MTD. All your records must be kept and submitted digitally via HMRC-recognised software. You can upload receipts and data into Xero, but the data itself needs to flow through the MTD-compatible software.
HMRC will combine your total qualifying income from all your sole trader businesses and property income. If the combined amount is above the MTD for Income Tax threshold, you’re in. You’ll need to submit separate quarterly updates for each business or property income source — for example, a sole trader who also has a property business could submit eight quarterly updates a year — but you’ll only submit one final declaration that covers all your income sources. The good news is that with Xero you don't need to pay for multiple subscriptions should you have multiple income streams. You can stay compliant with MTD within one Xero organisation, keeping the cost impact of MTD for Income Tax down.
HMRC will check your last tax return against the threshold, so if you think you’re close, it's best to get set up now to ensure compliance. The real benefit is greater control of your business finances: get quarterly visibility to avoid year-end tax panic, improve accuracy with auto-data entry, and enhance cash flow management.
Both are part of HMRC's initiative to move tax reporting fully digital, but their scope and timing differ. MTD for VAT is already mandatory for all VAT-registered businesses (including Limited Companies) and requires quarterly VAT Returns. MTD for Income Tax is being phased in (starting April 2026), applying to eligible sole traders and landlords with income over the threshold, requiring quarterly Income & Expense updates and an annual Final Declaration (replacing Self Assessment).

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