If you’re self-employed, you’ve probably heard about Making Tax Digital for Income Tax (MTD for IT). But what does it actually mean for you? More importantly, does it even apply to you?

There’s a lot of confusion around MTD, so let’s break it down in simple terms.

Who Does MTD for IT Affect?

👉 It applies to:
✅ Self-employed individuals earning over £50,000 from April 2026
✅ Those earning over £30,000 from April 2027

👉 It does NOT apply to:
❌ Foster carers (because of Qualifying Care Relief)
❌ Employees or anyone already filing through PAYE

If you’re self-employed, you may need to comply—but only if your earnings are over the relevant threshold.

What’s Changing with MTD for IT?

Right now, self-employed people submit one self-assessment tax return per year. Under MTD for IT, this will change:

📌 Quarterly Updates – You’ll need to report your income and expenses every three months using HMRC-approved software.
📌 After the fourth Quarterly update adjust figures – At the end of the year, you’ll need to adjust the figures for things such as Capital Allowances, removing disallowable expenses, accounting for prepayments and accruals etc.
📌 A Final Declaration – This replaces the current Self Assessment tax return.

HMRC’s aim is to make tax reporting more digital and streamlined, but for many self-employed people, it’s an extra layer of admin to deal with.

How to Check If You Need to Comply

✔️ Are you self-employed?
✔️ Do you earn more than £50,000 per year (from 2026) or £30,000 (from 2027)?
✔️ Do you currently file a Self Assessment tax return?

If you answered yes to all three, you’ll need to follow MTD for IT rules when your income meets the threshold.

💡 Tip: If your income fluctuates and hovers around the £50,000 or £30,000 mark, it’s a good idea to get advice on whether you’ll be affected.

What Should You Do Now?

Even if you’re not affected yet, it’s wise to prepare early. Here’s how:

✅ Check Your Income – If you’re under the threshold, MTD for IT won’t apply to you (for now).
✅ Start Using Digital Accounting Software – HMRC-approved options like Xero, QuickFile, or FreeAgent will make compliance easier.
✅ Get Professional Advice – Ask me ! I can help you transition smoothly and avoid penalties.

Final Thoughts

MTD for IT is a big change, perhaps even bigger than when self assessment was introduced. But it won’t affect everyone and if you’re self-employed you need to start preparing now to avoid stress later.

Need help ? Get in touch, and I’ll be happy to guide you through it!