Getting Ready for the New Way to Do Tax Returns

It’s the biggest change since HMRC launched Self Assessment more than 30 years ago.

If you work for yourself as a sole trader or earn money from property then yo'll need to consider that tax returns are changing – with a new way to record and report your income and expenses. This is called Making Tax Digital for Income Tax or MTD for Income Tax.

You won’t fill out your tax return all at once, instead, you’ll split and spread the admin throughout the year.

You'll need to:

• Use recognised software - such as an app on your phone or laptop to record income and expenses

• Send quarterly updates to HMRC from this software

• Submit your tax return by 31 January each year

Phased Rollout:

Here’s when you need to start using recognised software to keep records:

6 April 2026 if your turnover is above £50,000

6 April 2027 if your turnover is above £30,000

6 April 2028 if your turnover is above £20,000

HMRC will work out your start date

They will only look at your total turnover from self-employment and property, put together, on your latest tax return.

Your turnover is the amount of money you bring in before you take off any expenses or pay tax. This is sometimes called ‘gross income’.

If you have other types of income those won't be included and they do not count towards the amounts shown above.

In your first year using the new service, you’ll still need to fill out a Self Assessment tax return for the previous tax year the usual way

That’s because you won’t have sent quarterly updates for the previous tax year. You can sign in and submit your Self Assessment tax return through your HMRC online tax account. You’ll still need to do this by 31 January.

Think of this as a transition to the new way of doing things

By the following January, you’ll be able to do everything straight from your software. This will make the process simpler in the long run.

FAQ's

What if my turnover hits any of the above amounts?

HMRC will get in touch to let you know that you must get ready for Making Tax Digital and sign up to use it. They won’t sign you up automatically, so it’s important to do this in time.

Can I sign up to use it sooner?

Sure. If you’d like to start using it sooner you can sign up voluntarily on GOV.UK – they will just ask you some questions to check you’re good to go.

I’ve only just started working for myself or renting out property – do I need to do this?

Not right away. First, you’ll do one Self Assessment tax return. Then HMRC will check your turnover and let you know when you need to sign up.

Get ready for Making Tax Digital today so you’re all set to start using the new system in time.

That way, you can steer clear of any penalties.

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Getting Ready for the New Way to Do Tax Returns - created 8.12.25