Making Tax Digital to Extend to Income Tax
It doesn’t seem long ago that we were supporting our VAT-registered clients to get them ready for Making Tax Digital (MTD) for VAT. In fact, it was 1 November 2022. Now we are helping our clients ahead of another MTD deadline.
MTD for Income Tax is set to become mandatory in phases, starting from 6 April 2026. You’ll need to use MTD for Income Tax from that date if you are an individual registered for Self Assessment; get income from self-employment or property, or both, before 6 April 2025; and have a qualifying income of more than £50,000 in the 2024 to 2025 tax year.
This means that, even if you are registered for Self-Assessment, you might not have to go onto the MTD scheme straightaway.
HMRC will be reviewing 2024-2025 tax returns (assuming they have been submitted by 31 January 2026) and, if your qualifying income is more than £50,000, they will write to you to confirm that you must start using MTD for Income Tax by 6 April 2026. Then you must source compatible software, authorise it and sign up for MTD.
Here at Lewis & Co, we would recommend that, even if you haven’t reached the qualifying income of £50,000, it is worth considering moving onto MTD, simply so you are ready when it does apply to you. In any case, there is already another deadline in place, of 6 April 2027, for individuals who have a qualifying income of more than £30,000 in the 2025 to 2026 tax year.
After the qualifying date, if you do not submit your Self-Assessment tax return via a MTD-compatible software, you may have to pay a penalty. Also, don’t be complacent and assume that your current digital record-keeping is enough. You must check that your software is MTD compatible and sign up for MTD.
The current regulations do not cover partnerships but they are likely to also be included in due course.
Please do get in touch if you’d like to advice about compatible software for MTD. If you’ve got any questions at all, please call our team on: 01892 513515 or email: info@lewisandco.biz