HMRC to start sending letters with MTD update

By Jyoti Onthriar ATT, Tax Associate Director

If you are self-employed, a sole trader, or a landlord earning more than £50,000 per year, expect a letter from HM Revenue & Customs (HMRC) soon.

It will outline new digital tax reporting requirements under Making Tax Digital (MTD) for Income Tax Self-Assessment (ITSA), which comes into effect in April 2026.

What is MTD for Income Tax?

Currently, you submit a Self-Assessment tax return once a year. Under the new system, you will need to:

• Keep digital records of your income and expenses
• Submit quarterly updates via MTD-compatible software
• File an end-of-year declaration to finalise your tax position

When do I need to act?

HMRC is sending out letters from April 2025, based on 2023-24 tax returns. If you qualify, you will have two options:

1. Sign up early (from 2025-26) – This allows time to adjust to MTD with support from HMRC.
2. Wait until April 2026 – You must comply by this date if you meet the income threshold.

Do I need special software?

Yes, you will need MTD-compatible software to submit updates. If you are unsure which one suits your needs, we can help you choose.

What if I cannot use digital tools?

Exemptions exist for those who are digitally excluded due to age, disability, or lack of access. We can assist with exemption applications.

How can I prepare?

Start exploring software options, get familiar with digital record-keeping, and plan ahead for the transition.

How we can support you

We make MTD compliance easy by:

• Helping you select and set up the right software
• Providing guidance on digital record-keeping
• Ensuring your quarterly updates and annual declarations go smoothly

Although MTD does not come into effect until 2026, preparing early will save time, stress, and last-minute panic. If you need help, get in touch today.