What Is Making Tax Digital for Income Tax (MTD for IT)?
Making Tax Digital for Income Tax is HMRC's new system for reporting Income Tax. It applies to sole traders and landlords and replaces the single annual tax return with four quarterly submissions and a Final Declaration.
Quarterly submissions are reports of your rental income and expenses and must be submitted to HMRC every quarter. These are not full tax returns and no tax is due at the point of submission. Under the new rules, you must use HMRC-recognised MTD IT software to submit your quarterly returns.
If you have multiple rental properties, your rental income and expenses will be combined into a single quarterly update.
We will continue to prepare and file your year-end Self Assessment return, now referred to as your Final Declaration, as usual. The Final Declaration will confirm your annual tax position with HMRC.
MTD for IT Timeline: From 2026 Onwards
Your start date depends on your total qualifying income, which includes all business income before expenses and all rental income from property.
Quarterly Submission Deadlines (2026–27)
Summary reports of your income and expenses must be submitted to HMRC every quarter. These are not full tax returns and no tax is due at the point of submission, but they must be filed on time.
| Quarter | Submission Deadline |
|---|---|
| Quarter 1 (6 April 2026 to 5 July 2026) | 7 August 2026 |
| Quarter 2 (6 July 2026 to 5 October 2026) | 7 November 2026 |
| Quarter 3 (6 October 2026 to 5 January 2027) | 7 February 2027 |
| Quarter 4 (6 January 2027 to 5 April 2027) | 7 May 2027 |
* Please note that the default quarter dates set by HMRC are as above. We recommend electing to change these so they align with the calendar year, which we have explained in detail on this website.
You have received this communication as our records indicate that Making Tax Digital for Income Tax will apply to you, and you will be required to file quarterly returns as of April 2026.
For a detailed explanation and resources on MTD IT, please refer to Making Tax Digital for Income Tax Key Information.
Next Steps & How to Prepare
Understand Your Registration Date
The first step is determining when you need to register for MTD and notifying HMRC.
We believe you will fall under MTD from April 2026, and your first quarterly submission will be for the period ending 30 June 2026.
Registering for MTD simply informs HMRC that you fall within the new rules and that they should expect quarterly submissions from you.
You can either register yourself for MTD IT or Blinkhorns can register you on your behalf.
Register Yourself For MTD IT Using our Video
Our step-by-step video walkthrough on how to register for MTD IT.
Watch VideoRegister Yourself For MTD IT Using HMRC’s Guide
Follow HMRC's step-by-step guide to register directly with HMRC.
HMRC Guide →Blinkhorns to Register You
We handle everything with HMRC on your behalf.
One-off registration fee
Register with Blinkhorns →Choose Your Software Approach & Decide Who Will Handle the Filing
You will need to decide whether you want to:
- Use a spreadsheet with bridging software
- Use full cloud-based accounting software
- Confirm who will be responsible for filing the MTD IT quarterly returns — Blinkhorns or you
Software Options
Choose the approach that best suits your business.
Bridging Software
Bridging software allows you to continue using spreadsheets (e.g. Excel) while complying with MTD IT.
How Bridging Software Works
- You keep your records in a spreadsheet
- The bridging tool imports the figures
- It creates the required HMRC-compliant digital link
- It submits your quarterly data securely
- You remain fully compliant without changing your record-keeping process
This method is ideal for clients with simple tax affairs or who prefer spreadsheets.
A full list of HMRC's approved bridging software can be found here: View approved software →
Already VAT registered with bridging software?
If you are already VAT registered and using bridging software to prepare and submit your quarterly VAT returns, it may be sensible to use the same software to file your MTD IT returns. We recommend reaching out to your current software provider to understand how this will work for you.
Blinkhorns Prepares and Files Your Quarterly MTD IT Returns
If you would prefer Blinkhorns to deal with the preparation and submission of your MTD IT quarterly returns, then please Get In Touch to discuss.
You can help keep our costs as low as possible by:
- Using a single business bank account (and credit card if applicable) for business income and expenses only
- Sending us your records promptly, ideally monthly, so we can stay up to date
- If your rental property is managed by a managing agent, please ensure that we are copied on the monthly rental statements at rs_agents@blinkhorns.co.uk
What Is Cloud Software?
Cloud accounting software is designed to manage your business's financial records and operations. Instead of storing your financial data on paper or a spreadsheet, it is stored securely in the cloud and accessible 24/7 from anywhere you have internet access. It automates tedious bookkeeping tasks while providing a real-time view of your company's financial health.
How Cloud Software Works
Unlike traditional desktop software, cloud accounting offers a dynamic platform for your numbers:
- Bank Feeds: Connects directly to your bank accounts, automatically importing transactions
- Real-Time Collaboration: You and your accountant can look at the same "live" data simultaneously
- Mobile Invoicing: Snap a photo of a receipt or send a professional invoice on the go
This method is ideal for business owners who want to move from reactive bookkeeping to proactive financial management.
A Note on Security: Cloud accounting providers like Xero use the same level of encryption as online banking, ensuring your sensitive financial data is often much safer in the cloud than on a laptop that could be lost or stolen.
Our Recommendation
If you prefer a cloud solution, we recommend Xero Simple, although you may use any HMRC-approved provider.
A full list of HMRC's approved cloud software can be found here: View approved software →
Already VAT registered with cloud software?
If you are already VAT registered and using cloud software to prepare and submit your quarterly VAT returns, it may be sensible to use the same software to file your MTD IT returns. We recommend reaching out to your current software provider to understand how this will work for you.
What is Xero Simple?
Xero Simple is specifically designed as an entry-level solution for small businesses, sole traders, and landlords. It is fully MTD for Income Tax compliant and gives you the core accounting features needed to submit updates and collaborate with your accountant.
How Xero Simple Helps You With MTD IT
| Feature | How it helps with MTD IT |
|---|---|
| Snap Receipts | Snap a photo of a receipt; Xero extracts the data and stores the digital copy — fulfilling HMRC's digital record requirements instantly. |
| Automated Bank Feeds | Transactions flow from your bank into Xero. You just "reconcile" them, ensuring your quarterly updates are always based on real-time data. |
| HMRC Direct Connect | Xero is "HMRC-recognised," meaning it talks directly to the government's systems. You don't need separate bridging software. |
| Real-Time Tax Estimates | Because you are updating records throughout the year, Xero can give you a running estimate of how much tax you actually owe. |
Xero Simple Content & Training Resources
Xero will be running a series of webinars for Blinkhorns clients. These webinars are designed to show you how to set up your Xero Simple account, how to use Xero Simple, and how to submit your quarterly MTD IT returns.
Please register your interest here:
Additionally, here are some useful links to Xero's resources:
Use Xero Simple for Making Tax Digital for Income Tax Set up your Xero (YouTube) MTD IT Webinar Registration (Zoom)Using Xero Simple & Filing Your Own Quarterly MTD IT Returns
If you have decided to file your own returns using Xero Simple:
- Set up your Xero Simple account online directly with Xero, or ask us to set up the account on your behalf
- Use the guidance we have provided, along with Xero Simple videos and bespoke Blinkhorns webinars, to prepare and submit your quarterly MTD IT returns
We will continue to prepare and file your year-end Self Assessment return (Final Declaration) as usual.
There will be no additional quarterly accounting fees if you choose to submit the filings yourself. We're happy to offer some limited support; however, correcting bookkeeping within the system can take more time than completing it on your behalf. Xero offers an excellent support team and a wide range of helpful resources, complemented by their bespoke webinars.
Please note: we cannot provide setup or support if you choose alternative cloud software.
Blinkhorns Prepares and Files Your Quarterly MTD IT Returns
If you would prefer Blinkhorns to deal with the preparation and submission of your MTD IT quarterly returns, then please Get In Touch to discuss.
You can help keep our costs as low as possible by:
- Using a single business bank account (and credit card if applicable) for business income and expenses only
- Sending us your records promptly, ideally monthly, so we can stay up to date
- If your rental property is managed by a managing agent, please ensure that we are copied on the monthly rental statements at rs_agents@blinkhorns.co.uk
Get in Touch
If you'd like to know more about Making Tax Digital for Income Tax, or how it affects you, please feel free to contact us and we'll be happy to walk you through the process and answer any questions you have.
Making Tax Digital for Income Tax: Key Information
Expand the sections below to learn more.
Why is Self Assessment changing?
Making Tax Digital for Income Tax (MTD for IT) is HMRC's digital replacement for the traditional Self Assessment system and is part of the government's plan to digitalise the UK tax system. The key reasons for the change include reducing tax errors through digital systems, closing the tax gap with more accurate reporting, aligning tax reporting with modern digital business tools, and making tax compliance easier and more efficient overall.
How does Self Assessment currently work?
The current Self Assessment system requires one annual tax return submission. You can submit via the HMRC online portal, paper forms by post, compatible software, or through your accountant or bookkeeper. The key deadlines are 31 October for paper submissions and 31 January for online submissions. You keep digital or paper records throughout the tax year and compile them into one annual return at the end of the year.
How will MTD for Income Tax change Self Assessment?
MTD for Income Tax changes how you submit your tax information. Instead of one annual return, you will send regular digital updates:
- HMRC’s online portal will be replaced by MTD IT-compatible software
- Paper filing will be replaced by digital submissions
- Annual-only reporting will be replaced by quarterly updates
- You’ll submit four quarterly updates using MTD IT-compatible software throughout the tax year
- You’ll still submit one final declaration by 31 January for additional income sources such as savings and investments
- Digital record-keeping becomes mandatory — records must be maintained in compatible software
What software do I need for MTD for Income Tax?
You’ll need software that’s compatible with HMRC’s systems. This software must be able to keep digital records and send your quarterly updates and final declaration directly to HMRC.
A full list of approved software by HMRC can be found here: Find software that works with Making Tax Digital for Income Tax →
Are there any benefits to the changes?
MTD for Income Tax offers several advantages:
- Real-time tax estimates: HMRC provides ongoing tax liability estimates so you can prepare for tax bills throughout the year
- Error correction: Mistakes can be fixed in your next quarterly update rather than waiting until the end of the year
- Improved business insights: Quarterly reporting encourages consistent record-keeping and regular financial reviews
What if I have more than one business?
If you have more than one self-employed business or property, or are both a sole trader and a landlord, you combine the income and expenses from all of them and send one set of quarterly updates to HMRC for all your business activities. You’ll only need to submit one final declaration that covers all income sources.
Do I need to keep paper receipts with MTD IT?
No. The rules require digital records, which means you can take photos of your receipts to create digital copies. Once you have a digital version stored securely, you can dispose of the paper receipt — the digital copy satisfies HMRC’s record-keeping requirements. Tools like Hubdoc and Dext make this easy.
What if my income is below the MTD IT thresholds?
If your income from self-employment or property rental doesn’t exceed the MTD IT thresholds (starting at £50,000 from April 2026), you’ll continue using the current Self Assessment system with no changes to how you file your annual tax return.
Further reading
For a detailed overview of Making Tax Digital and self-assessment changes, the following HMRC pages may be helpful:
Making Tax Digital for Income Tax for sole traders and landlords: step by step →
Find out if and when you need to use Making Tax Digital for Income Tax →
Use Making Tax Digital for Income Tax →