Making Tax Digital for Income Tax is now part of the tax system for many self employed individuals and landlords. From 6 April 2026, taxpayers with qualifying income above £50,000 from self employment and property came within the rules. The threshold reduces to more than £30,000 from 6 April 2027 and more than £20,000 from 6 April 2028.
If you are affected, keeping accurate digital tax records is now an important part of managing your tax affairs. Good records can also make your Self Assessment process easier and give you a clearer view of your income and expenses throughout the year.
What Making Tax Digital means for your records
Making Tax Digital for Income Tax requires eligible taxpayers to use compatible software to create and store digital records of their self employment and property income and expenses. You must also continue to keep supporting documents such as invoices and bank statements used to prepare your tax return.
This means digital bookkeeping should become part of your normal business routine rather than something completed just before a tax deadline.
Who needs to use Making Tax Digital?
The rules are being introduced in stages.
For the 2024 to 2025 tax year, qualifying income above £50,000 means the taxpayer must use Making Tax Digital from 6 April 2026.
For the 2025 to 2026 tax year, the threshold is more than £30,000, with the requirement beginning on 6 April 2027.
For the 2026 to 2027 tax year, the threshold is more than £20,000, with the requirement beginning on 6 April 2028.
Qualifying income is based on gross income from self employment and property before expenses and tax.
What should you keep digitally?
Your digital records should contain the relevant income and expense information for each self employment or property business.
This can include:
- Sales and other business income
- Property rental income
- Business expenses
- Property expenses
- Transaction dates
- Relevant income and expense categories
HMRC recommends creating digital records as close as possible to the date of each transaction. Keeping your records up to date can make quarterly reporting much easier.
Digital records do not replace your supporting documents
Moving to digital bookkeeping does not mean you can throw away every receipt or invoice.
HMRC confirms that taxpayers must continue keeping original records or supporting documents, or copies of them, that have been used to prepare their tax return. Examples include invoices and bank statements.
A good system therefore combines digital bookkeeping with organised supporting evidence.
Keep your income and expenses accurate
Before submitting information to HMRC, check that your records are complete.
Review:
- All business income
- Rental income where applicable
- Allowable business expenses
- Property expenses
- Bank transactions
- Duplicate entries
- Missing receipts and invoices
HMRC has stated that taxpayers should correct digital records as soon as possible when they become aware of an error.
Regular checks are usually easier than trying to reconstruct a full year’s records later.
How quarterly updates work
For taxpayers within Making Tax Digital, compatible software adds together the digital records for each relevant business and creates totals for income and expense categories.
These quarterly updates are summaries, not tax returns. You do not need to make your year end tax adjustments before sending them.
For the 2026 to 2027 tax year, the standard quarterly deadlines are:
- 7 August 2026
- 7 November 2026
- 7 February 2027
- 7 May 2027
The quarterly updates are cumulative, meaning later updates include the information from earlier periods.
What happens to Self Assessment?
Making Tax Digital does not simply remove the need to deal with Self Assessment.
For the tax year before you start using Making Tax Digital, you still submit your Self Assessment return in the normal way. Once you are within the new system, your compatible software is used to complete and submit your tax return after you have made the necessary year end adjustments.
You may also need to add information that HMRC does not already hold, such as savings interest, dividends or other income and gains. You should check the information carefully before submitting your return.
Keep your records ready for year end
Quarterly updates are only part of the process.
At the end of the tax year, you may need to:
- Review your full year income
- Correct any remaining errors
- Make relevant tax adjustments
- Claim applicable reliefs and allowances
- Add other income or gains
- Check your tax calculation
- Submit your tax return
For taxpayers using Making Tax Digital for the 2026 to 2027 tax year, the tax return deadline is 31 January 2028.
Check your software
Your accounting software needs to be compatible with Making Tax Digital for Income Tax.
A suitable system should allow you to maintain digital records, prepare quarterly updates and submit the required information to HMRC.
Before relying on your existing software, check that it supports MTD Income Tax rather than assuming that ordinary accounting software will automatically meet the requirements.
Keep your records secure and accessible
Changing accounting software does not remove your record keeping responsibilities.
HMRC states that digital records must generally be retained for at least five years from the relevant tax return submission deadline. If you change software, make sure you can still access your previous records and securely retain any information you need.
What you should check now
A simple review can help you determine whether your records are ready.
Check that:
- You know whether Making Tax Digital applies to you
- Your MTD compatible software is set up
- Your business and property income is recorded digitally
- Expenses are being recorded accurately
- Bank transactions are reconciled
- Receipts and invoices are stored safely
- Errors are corrected promptly
- You understand your next quarterly deadline
- You are keeping information needed for your Self Assessment return
Taking these steps now can make future reporting more manageable.
How Tax2u can help
Making Tax Digital introduces new record keeping and reporting responsibilities, but you do not have to manage them on your own.
Tax2u can help with:
- Making Tax Digital registration
- MTD compatible bookkeeping
- Digital tax records
- Quarterly update preparation
- Self Assessment
- Allowable expense reviews
- HMRC compliance
We can review your current records, explain what needs to change and help you establish a practical system for keeping your tax information organised.
Final thoughts
Making Tax Digital and Self Assessment are closely connected, so good record keeping is becoming increasingly important for self employed individuals and landlords.
Keeping accurate digital records throughout the year can make quarterly updates easier and provide better information for your eventual tax return. It also gives you more time to identify errors, organise supporting documents and prepare for tax payments.