Making Tax Digital is moving from “on the horizon” to “right in front of us”. From 6 April 2026, the UK Government will begin onboarding the first wave of individuals into Making Tax Digital for Income Tax. If you or your clients fall within the new rules, now is the time to get ready, understand your obligations, and make sure you have the right software and processes in place.

At HLWA, we take a no‑nonsense approach to tax and compliance. Our priority is making sure self employed individuals, sole traders, landlords, and small businesses aren’t caught out by new legislation or hit with costly penalties for avoidable mistakes. So here’s a clear, straight‑talking look at what’s changing, who needs to sign up, and how to stay compliant without losing valuable time to admin and paperwork.

Who Needs to Use Making Tax Digital for Income Tax?

You’ll need to follow the digital for income tax rules from 6 April 2026 if all the following apply:

• You are an individual registered for Self Assessment
• You receive income from self employment, income from property, or both
• You have qualifying income over £50,000

Qualifying income includes your gross income before expenses from self employment and/or property. This threshold will drop to £30,000 from April 2027, bringing even more taxpayers into the regime.

These rules apply to sole traders, landlords, and individuals with multiple income sources. If this sounds like you or your clients, you’ll need to use Making Tax Digital to report your tax affairs going forward.

Making Tax Digital: A New Way to Manage Income Tax

HMRC’s ambition is simple: move taxpayers away from annual tax returns and onto an integrated, digital system of record keeping, reporting and payments.

Under the Making Tax Digital MTD rules, individuals will need to:

1. Keep digital records

Paper records will no longer meet HMRC requirements. Using MTD compatible software or bridging software becomes mandatory. This software will need to provide the functions required to maintain accurate, digital records of income and expenses.

2. Submit quarterly updates

Instead of one annual tax return, you’ll send quarterly updates to HMRC. This gives the UK Government more frequent data and gives taxpayers a clearer picture of what they owe across the tax year.

Each update must be submitted through compatible software that can HMRC submit directly.

3. Finalise your income with an End of Period Statement (EOPS)

At the end of the accounting period, you’ll confirm adjustments, expenses, allowances and reliefs.

4. Submit a final declaration

This replaces the traditional Self Assessment return. It confirms all details, totals the tax owed, and brings together income from all sources, including property and self employment and property combined.

This is the new way HMRC expects taxpayers to report. It’s mandatory (not optional) for those within scope.

Compatible Software: What You’ll Need

To follow the rules, you must use MTD software. This could be:

• Fully MTD compatible software like Xero, QuickBooks or FreeAgent
• Bridging software that links spreadsheets to HMRC’s systems (though this may be a short‑term solution only)
• An online tool provided by a software company that integrates directly with HMRC

The key is ensuring your system can:

• Maintain digital records
• Send quarterly updates
• Complete the EOPS and final declaration
• Store data securely and accurately

HLWA already works with the leading cloud software tools and can recommend the right software for your business, whether you’re a sole trader, landlord or running multiple sites.

Income Tax News: Why This Matters Now

This isn’t just another HMRC tweak. It’s the biggest overhaul of tax digital for income reporting in decades.

Here’s why it matters:

• Mandatory compliance: HMRC won’t accept excuses once the rollout starts.
• Cost: Getting setup incorrectly will cost more later, whether in penalties, rework, or time wasted fixing errors.
• Better data: Quarterly reporting gives you a clearer view of your finances throughout the year, not just at the end.
• Less paperwork: Digital processes cut down manual admin and reduce mistakes.
• Future expansion: Corporation tax and other regimes may follow, and HMRC has hinted at further digitalisation.

If your current system is spreadsheet‑based, paper‑based, or manually updated, the sooner you start planning, the easier the transition will be.

Exemptions: Who Doesn’t Have to Join

A small number of people are exempt from Making Tax Digital:

• Those unable to use digital tools due to age, disability, or remote location
• Those whose religious beliefs prevent use of digital technology
• Individuals whose income is below the threshold
• People with other HMRC‑approved exemptions

If you believe you should be exempt, you must apply to HMRC and get written confirmation. HLWA can help you decide whether an exemption applies.

Practical Example: What Will Change for a Sole Trader

Example: A sole trader plumber with £65,000 qualifying income.

Under the current system:

• Keeps receipts in a folder
• Drops records to their accountant once a year
• Files one Self Assessment annually

Under MTD:

• Must keep digital records using software
• Sends quarterly updates every 3 months
• Submits an End of Period Statement
• Completes a final declaration

The admin burden increases, but with the right support, it doesn’t have to become complicated or time‑consuming.

How HLWA Can Help

We’re already guiding clients across Bristol, South Wales, and the South East through their transition to Making Tax Digital.

Here’s what we provide:

• Setup of software tailored to your business
• Training for you or your team
• Full management of your record keeping
• Quarterly submissions handled by your HLWA agent
• Advice on allowances, expenses, and tax-saving opportunities
• Ongoing support to avoid mistakes, penalties and stress

We’re straight-talking, practical, and focused on saving you money and time, not drowning you in jargon or selling software you don’t need.

Ready to Prepare for MTD?

Whether you’re a landlord, a sole trader, a pub operator or a growing business, April 2026 will come around fast. The earlier you get to grips with Making Tax Digital, the smoother your transition will be, and the less risk of falling foul of HMRC’s new rules.

If you want support choosing software, setting up digital records, or understanding how MTD affects your tax affairs,HLWA is here to help.