Making Tax Digital: The No-Faff 2026–2028 Guide

Updated November 2025

Why you’re getting scary letters from HMRC

HMRC has started writing to sole traders and landlords about Making Tax Digital for Income Tax (MTD for ITSA).

The letters are:

• long

• vague

• and not exactly written in “normal human” language

Additionally, it's worth mentioning that this is the third time we’ve had to update this article, as the rules continue to change. Clients should be prepared for further adjustments as HMRC continues refining the system. We will keep you updated as soon as anything changes.

So let’s fix the confusion and get to the part that matters: what YOU need to know, in plain English, with no panic and no faffing about.

1️⃣ Who has to use MTD for Income Tax and when?

MTD for Income Tax is for individuals, not companies:

• sole traders (self-employed)

• individual landlords (UK and overseas property)

It’s being rolled out in three phases based on your combined turnover from:

• all self-employments plus

• all property businesses (UK and overseas)

This combined figure is your qualifying income (gross, before expenses).

Income from PAYE jobs, pensions, dividends and most other sources doesn’t count towards the thresholds.

📅 MTD for Income Tax: key start dates

Your most recent Self Assessment tax return is used to determine your start date.

If your qualifying income is below £20,000, you remain on the normal Self Assessment system unless future changes bring you in.

2️⃣ What MTD actually means day-to-day

When you join MTD for Income Tax, you must:

✔ Keep digital records

Spreadsheets are allowed if linked with bridging software.

✔ Use HMRC-recognised software

Examples include FreeAgent, Xero, QuickBooks and other approved tools.

✔ Send quarterly updates

Every three months, for each income source you have.

✔ Submit an End of Period Statement (EOPS)

One per trade and per property business.

✔ File a Final Declaration

This replaces the Self Assessment tax return.

3️⃣ What if I have more than one business or property?

Threshold decision = all added together

HMRC looks at your total qualifying income across all trades + property.

Quarterly reporting = split back out again

Once in MTD, you must make separate quarterly submissions for each:

• each self-employed trade

• UK property

• overseas property

Example:
Designer + yoga instructor + landlord = 12 quarterly submissions per year (4 for each “bucket”), plus EOPS for each and one Final Declaration.

Good software handles this smoothly.

4️⃣ How landlords fit into all this

Landlord rules remain consistent:

• Rental income counts towards thresholds.

• Joint landlords each report their own share.

• UK and overseas property are treated as separate property businesses.

• You’ll submit quarterly updates for each one you have.

5️⃣ What you should do now (practical steps)

Step 1 - Work out your qualifying income

Add up gross turnover from all self-employment + all rental income.

Step 2 - Move to proper bookkeeping software

Choose from HMRC’s approved list and pick something that suits your workflow.

Step 3 - Separate business and personal finances

It keeps digital records clean, accurate and HMRC-friendly.

Step 4 - Practise quarterly-style bookkeeping

Get used to monthly or quarterly updates now so MTD feels natural later.

Step 5 - Talk to your accountant early

Demand has already spiked if you haven't already sorted an accountant, you'd better do it sooner.

6️⃣ What’s not changing

MTD for VAT

It has been mandatory for all VAT-registered businesses since April 2022.

MTD for Corporation Tax

Scrapped completely. CT600 filing continues as normal.

Tax payments

You still pay tax annually, even though reporting becomes quarterly.

7️⃣ Common myths (de-bunked)

❌ “I’ll have to pay tax four times a year.”
No, you only report quarterly.

❌ “Excel is banned.”
You can use spreadsheets with bridging software.

❌ “My accountant can just do everything the same as before.”
We can still file for you, but we need digital, on-time, quarterly records for each business activity.

8️⃣ How Gold Stag Accounts can help (with zero faff)

MTD is really about:

• better habits

• digital records

• little-and-often bookkeeping

Once you’re set up:

• quarterly updates are quick

• you’ll understand your tax position through the year

• year-end becomes a tidy-up instead of a panic

We can:

• assess which year you’ll join

• set you up on the right software

• link everything to HMRC

• design a workflow that makes quarterly submissions painless

If you’ve had one of those confusing HMRC letters, don’t worry, you’re not behind, you’re not in trouble, and you’re definitely not alone.

And remember: MTD rules keep shifting, so stay alert for updates. We’ll always keep you ahead of the curve with honest, clear information and zero fuss.