With just over a year to go before Making Tax Digital for Income Tax (MTD for IT) is mandated, now is the ideal time to assess whether your business will need to comply with the new regulations starting 6 April 2026.
If you are a sole trader or run an unincorporated property business, and your ‘qualifying income’ – essentially the turnover from your sole trade or property business – reaches £50,000 or more in the 2024/25 tax year, you will be mandated into MTD for IT from 6 April 2026. While it may be too early to confirm your 2024/25 income until your accounts or tax return are complete, your 2023/24 self-assessment tax return can offer a helpful indication as to whether or not you’ll be mandated. If your qualifying income in 2023/24 exceeded or approached £50,000, and you expect it to remain at a similar level or grow in 2024/25, then there’s a strong chance that you’ll be within the scope for MTD for IT.
HMRC have announced they will be using 2023/24 returns, due by 31 January 2025, to identify taxpayers likely to be mandated from 6 April 2026. These individuals can expect to receive letters in the coming months, outlining why they are likely to fall within MTD for IT requirements.
Receiving such a letter doesn’t need to be daunting. Transitioning to MTD for IT means keeping your accounting records in digital formats and submitting quarterly updates to HMRC. While this may feel like a significant change, it offers potential benefits such as more streamlined record-keeping and improved financial management.
If you receive one of these letters, or if you want to take proactive steps in preparing for MTD for IT, we’re here to help. From selecting the right digital tools to implementing the necessary processes, we can guide you every step of the way to ensure your business is fully compliant and ready to thrive under the new system. Reach out today to explore your options and get started on this important transition.
