Making Tax Digital: What the Next Step Means for Taxpayers

Making Tax Digital (MTD) is being introduced in stages, gradually changing how individuals and businesses keep records and report information to HMRC.

As MTD expands beyond VAT, many taxpayers are starting to ask what the next step involves and whether these changes will apply to them, often raising questions that would traditionally be discussed with a tax consultant in London or similar professional.

Phased Introduction of MTD for Income Tax From April 2026

The mandatory rollout of Making Tax Digital (MTD) for Income Tax is set to begin in April 2026. MTD for ITSA will bring substantial changes to how businesses, self-employed individuals, and landlords interact with HMRC. The system will require them to register, file, pay, and update their details through an online tax account.

To prepare for the launch of MTD for Income Tax in April 2026, it is essential to start considering the use of accounting software that is compatible with sending updates to HMRC.

You will need to use MTD for Income Tax from 6 April 2026 if all of the following apply, you:

• are an individual registered for self-assessment;
• get income from self-employment or property, or both, before 6 April 2025; or
• have a qualifying income of more than £50,000 in the 2024 to 2025 tax year.

MTD for Income Tax will then be extended to those with an income between £30,000 and £50,000 from 6 April 2027.

It was announced as part of the Budget measures that MTD for Income Tax will be extended to sole traders and landlords with income over £20,000 by the end of the current Parliament. The precise timing of this change has yet to be confirmed.

How Making Tax Digital Is Evolving

MTD was first introduced for VAT, requiring digital record-keeping and online submissions. The next phase extends similar principles to other types of tax, including Income Tax.

The aim is to move away from annual, paper-based reporting towards more regular digital updates throughout the year, increasing visibility for HMRC and reducing year-end adjustments that a tax specialist in London might previously have dealt with in one go.

Who May Be Affected Next

The next stages of MTD are expected to affect a wider group of taxpayers, including:

• Self-employed individuals
• Landlords
• Businesses already familiar with digital VAT reporting

Whether MTD applies will depend on factors such as income sources, income levels, and how tax is currently reported.

What Will Change in Practice

For those affected, the main changes are likely to include:

• Keeping digital records of income and expenses
• Using compatible software rather than manual records alone
• Sending regular updates to HMRC during the year
• Completing an end-of-year declaration

For some taxpayers, this will mean adjusting long-standing record-keeping habits.

Why It Is Worth Understanding the Next Step

Even if MTD does not apply to you immediately, understanding how the system is developing can help avoid surprises later.

Knowing what changes are coming allows time to consider how records are kept and what adjustments may be needed in the future.

HMRC Guidance on Making Tax Digital

HMRC sets out how Making Tax Digital works, who will be affected, and how the system is being introduced on
GOV.UK.

Will the Next Stage of Making Tax Digital Apply to You?

Whether Making Tax Digital applies to you next will depend on your income levels, the type of activities you carry out, and how you currently deal with HMRC. For individuals and businesses in Wimbledon and nearby areas such as Raynes Park and Morden, CIGMA Accounting can review your position and help you understand when the changes may affect you and what preparation, if any, is needed.