HMRC sends letters as next phase of MTD edges closer

From April 2026, the way you report your income tax will change.

HM Revenue & Customs (HMRC) is introducing Making Tax Digital (MTD) for Income Tax Self-Assessment (ITSA), and if you are a sole trader, self-employed individual, or landlord earning over £50,000 per year, you will soon receive a letter from HMRC explaining what this means for you.

The MTD changes on the way

Currently, you file your Self-Assessment tax return once a year. Under MTD for Income Tax, from 6 April 2026, you will need to:

Keep digital records of your income and expenses

Submit quarterly updates to HMRC using MTD-compatible software

Complete an end-of-period statement (EOPS) and final declaration annually

These changes are designed to make tax reporting more efficient and reduce errors, but we understand that adapting to a new system can feel overwhelming.

What you need to do now

With the first letters from HMRC arriving from April 2025, now is the time to start preparing. Here is what we recommend:

Understand if you are affected – If your income from self-employment or property exceeds £50,000, you’ll need to comply with MTD from April 2026. HMRC will be writing to affected taxpayers based on their 2023-24 Self-Assessment returns.

Choose the right software – MTD requires you to use compatible software to keep records and submit updates. If you are unsure which software is best for you, we can help you find the right solution.

Decide when to sign up – HMRC has provided two options:

Option 1 – Early sign-up (2025-26 tax year) – This gives you time to get used to MTD before it becomes mandatory, with access to HMRC’s specialist support team.

Option 2 – Standard sign-up (2026-27 tax year) – You wait until April 2026 to comply.

Consider exemptions – Some individuals may qualify for an exemption due to age, disability, or lack of access to digital tools. If you think this may apply to you, we can assist with your application.