5 Steps to Prepare for Making Tax Digital for Income Tax Before April 2026
Perpetual Blogcategory: Perpetual Blog
If you're a sole trader or landlord, you've probably heard whispers about Making Tax Digital for Income Tax (MTD for ITSA). Maybe you've been hoping it would quietly go away. Spoiler alert: it's not going anywhere.
From 6 April 2026, HMRC is changing how self-employed individuals and landlords report their income. Instead of the traditional annual Self Assessment tax return, you'll need to keep digital records and submit quarterly updates to HMRC.
Sound like a headache? It doesn't have to be. With a bit of preparation now, you can make the transition smooth and stress-free. Here's your friendly guide to getting ready.
What Exactly is Making Tax Digital for Income Tax?
Before we dive into the steps, let's quickly cover what MTD for Income Tax actually means.
In a nutshell, HMRC wants to modernise the tax system. They're moving away from the annual tax return model towards a more "real-time" approach. Under MTD for Income Tax, you'll need to:
- Keep digital records of your income and expenses using compatible software
- Submit quarterly updates to HMRC (four times a year)
- Submit a final declaration by 31 January following the end of the tax year
The idea is that you'll have a clearer picture of your tax position throughout the year: no more nasty surprises come January.
Who Needs to Comply (And When)?
Not everyone is affected straight away. Here's the timeline:
| Your Qualifying Income | When You Must Comply |
|---|---|
| Over £50,000 | 6 April 2026 |
| Between £30,000 and £50,000 | 6 April 2027 |
| Below £30,000 | TBC (likely later) |
Qualifying income includes your total gross income from self-employment and/or property. So if you're a landlord with rental income of £35,000 and a side hustle bringing in £20,000, your combined qualifying income is £55,000: meaning you're in the April 2026 group.
Note: If you think you might be exempt (for example, due to age, disability, or lack of internet access), you may be able to apply for an exemption. But for most people, it's time to get prepared.
Step 1: Check Your Income Threshold
First things first: do you actually need to worry about this?
Take a look at your 2024/25 tax year figures. Add up your gross income from:
- Self-employment (before expenses)
- Property rental income
If the total is over £50,000, you're in the first wave starting April 2026. If it's between £30,000 and £50,000, you've got until April 2027: but honestly, there's no harm in getting ahead of the game.
Top tip: Even if you're below the threshold now, your income might creep up. Getting your digital systems in place early means you won't be scrambling later.
Step 2: Choose HMRC-Compatible Software
Here's where things get practical. Under MTD, you can't just keep your records in a spreadsheet and email them to HMRC. You need compatible software that can:
- Store digital records of your income and expenses
- Submit quarterly updates directly to HMRC
- Handle the end-of-year final declaration
There are plenty of options out there, but we're big fans of Xero here at Perpetual Accountancy. It's user-friendly, cloud-based, and ticks all the HMRC compatibility boxes. Plus, it makes collaboration with your accountant a breeze: we can see your figures in real-time and flag any issues before they become problems.
Not sure which software is right for you? That's exactly the kind of thing we help with. We can assess your situation and get you set up with the right tools.
Step 3: Get Your Records in Order
If your current bookkeeping system involves a shoebox full of receipts and a vague sense of dread, now's the time to change that.
Under MTD, you'll need to keep digital records of:
- Income: The amount, date, and source
- Expenses: The amount, date, and category
This doesn't mean you need to become a bookkeeping wizard overnight. But it does mean establishing a system that captures this information consistently.
Here are a few quick wins:
- Use your software's bank feed to automatically import transactions
- Snap photos of receipts using your phone and attach them to transactions
- Set aside 30 minutes a week to categorise and review your records
The goal is to make quarterly submissions feel like a quick check-in rather than a major project.
Step 4: Prepare for Quarterly Submissions
This is the big mindset shift. Instead of thinking about your taxes once a year (usually in a panic around January), you'll be reporting every three months.
The quarterly deadlines will look something like this:
| Quarter | Period Covered | Submission Deadline |
|---|---|---|
| Q1 | 6 April – 5 July | 5 August |
| Q2 | 6 July – 5 October | 5 November |
| Q3 | 6 October – 5 January | 5 February |
| Q4 | 6 January – 5 April | 5 May |
After your four quarterly updates, you'll submit a final declaration by 31 January (just like the current Self Assessment deadline).
The silver lining? By keeping on top of things quarterly, you'll have a much clearer idea of your tax bill throughout the year. No more guessing, no more nasty surprises.
Step 5: Get Support in Place
Let's be honest: running a business or managing rental properties is busy enough without adding "become a tax expert" to your to-do list.
This is where having the right accountant in your corner makes all the difference. At Perpetual Accountancy, we specialise in helping sole traders and landlords navigate exactly this kind of change. Here's how we can help:
- Software setup: We'll get you up and running on Xero (or another compatible platform) and make sure it's connected to HMRC properly
- Training and support: We'll show you the basics so you feel confident managing your day-to-day records
- Quarterly reviews: We can handle your quarterly submissions for you, or review them before you hit "send"
- Ongoing advice: Tax rules change constantly: we'll keep you informed and compliant
Our approach is fixed-fee, so you'll know exactly what you're paying each month. No surprise bills, no awkward conversations about ad-hoc charges.
Don't Leave It Until the Last Minute
April 2026 might feel like ages away, but trust us: it'll come around fast. The businesses that start preparing now will have a much smoother transition than those who leave it until March 2026.
Here's a quick recap of your action plan:
- Check your income threshold to confirm when you need to comply
- Choose compatible software (we recommend Xero)
- Get your records in order with a consistent digital system
- Prepare for quarterly submissions by adjusting your mindset and schedule
- Get support in place so you're not doing this alone
Ready to Get Started?
If you're feeling a bit overwhelmed, don't worry: that's completely normal. The good news is you don't have to figure this out by yourself.
We're helping loads of sole traders and landlords get MTD-ready right now, and we'd love to help you too. Whether you need a full Xero setup, a bit of training, or someone to handle the whole thing for you, we've got you covered.
Drop us a message or give us a call, and let's get you sorted before the deadline. Future you will be very grateful.