What is Making Tax Digital and Does It Affect Me?
What is Making Tax Digital and does it affect me? It affects you if your combined self-employment and rental income is over £50,000 — here’s what changes and when.
Making Tax Digital (MTD) is HMRC’s new way of reporting income tax. It affects you if your combined self-employment turnover and gross rental income is more than £50,000 — from April 2026 you’ll keep digital records and send HMRC four quarterly updates instead of one annual return. If you’re under that figure, nothing changes yet: the threshold falls to £30,000 in April 2027 and is expected to reach £20,000 in April 2028.
What actually changes
Three things, and no more than that:
- Your records go digital. Income and expenses must be kept in HMRC-compatible software rather than a notebook or a spreadsheet on its own.
- You report four times a year. Each quarter you send a short summary of income and expenses. It’s a summary, not a mini tax return.
- You finish with a final declaration. At year-end you confirm the figures and claim anything else — much like today’s Self Assessment.
What doesn’t change
Your tax bill is worked out the same way, and you still pay by the usual Self Assessment dates. MTD changes how often you report, not how much you owe.
How to work out if it applies to you
Add together your self-employment turnover (before expenses) and your gross rent. Use the figures from your 2024/25 tax return. Over £50,000? April 2026 is your start date. Between £30,000 and £50,000? April 2027.
What to do next
Don’t rush out and buy software before you know what you need. Check your figures, then choose an app that suits how you actually work. If you’d like a second opinion, we’ll run a free MTD check and tell you honestly where you stand — call the team in Helston on 01326 377104.