Less than six months to go: get ready for MTD, warns ATT
With less than six months until the first wave of taxpayers is brought in to the Making Tax Digital scheme, the Association of Taxation Technicians (ATT) has warned landlords and sole traders to be prepared for the significant changes that arrive in April.
Making Tax Digital for Income Tax (MTD) will see those with income from trading and property required to keep digital records and submit quarterly updates to HMRC, along with an annual “digital tax return”.
The new rules come in to force in April 2026 for those with a total gross income (before expenses) of over £50,000 a year from April 2026, with lower income bands added in subsequent years. HMRC statistics reveal that 864,000 sole traders and landlords are expected to be in the first wave of taxpayers, rising to almost 3 million as lower income individuals are included by April 2028.
The ATT says that with the first wave of the scheme just a few months away, it is crucial that those affected ensure they are prepared for the new regime, which will introduce a range of changes to how many people manage their record keeping and tax affairs.
Jon Stride, chair of the ATT’s Technical Steering Group, said:
“It is now less than six months until the introduction of Making Tax Digital, the biggest change to income tax since self-assessment was introduced.
“The scale of the change is huge, and those affected must consider how they will handle the shift, including their software options and the costs. Some might want to consider looking for a tax adviser, accountant or bookkeeper to help, if they don't have one already.
“Taxpayers will need to use MTD-compatible software to keep their records and file information with HMRC. This may be a steep learning curve if they have not used software in the past.
“Another key challenge is the requirement to interact with HMRC more often – with an update to be filed each quarter as well as an annual return. This could lead to a heavier administrative burden on those who have previously only undertaken record keeping once a year when preparing their tax return.
“Those needing to report income from both property rental income and income from a trading activity will need to file eight quarterly submissions to HMRC each year, which might come as a shock – particularly if they are not VAT registered and not used to a quarterly reporting requirement.
“On the upside, some businesses may benefit from the better record keeping that comes with MTD – for example by having a better, more real time view of their financial position, instead of waiting until they file their tax return in January.”