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Income Tax Self Assessment (MTD)

MTD for Income Tax doesn’t change the rules of income tax. The rules around allowable expenses, personal tax allowances, National Insurance contributions, and so on, all remain the same. All that changes with MTD for Income Tax are the requirements and processes around reporting the information to HMRC. The goal is to give you better insight into your taxes and by extension, you get better visibility into your business finances. This includes your all-important cash flow.

Key Components of MTD

If you need help with your MTD for Income Tax implemetation or just your Tax Return do not hesitate to get in touch today. How we can help?

  • Keeping digital accounting records
  • Filing quarterly updates with HMRC
  • Seamless data flow to HMRC without manual input
  • End of year finalisation process
Digital Reporting

MTD changes the process of reporting to HMRC, requiring digital records and direct updates without manual input.

Better Visibility

Gain better insight into your taxes and business finances, including your all-important cash flow.

Need help with MTD implementation? Get expert support today.

MTD FAQ

MTD is a government initiative to modernize the tax system, requiring businesses and individuals to keep digital records and file tax updates using compatible software.

No, MTD does not change the underlying tax rules, rates, or allowances. It only changes the method of reporting your financial information to HMRC.

It generally applies to self-employed individuals and landlords with a total qualifying income above a certain threshold (currently set at £50,000 from April 2026).

You must use MTD-compatible software, such as Xero, that can maintain digital records and communicate directly with HMRC’s systems.

Under MTD for Income Tax, you will need to send quarterly updates of your business income and expenses to HMRC, followed by an end-of-year finalisation.

The traditional self-assessment tax return is replaced by the MTD process, which involves quarterly updates and an ‘End of Period Statement’ (EOPS) and a ‘Final Declaration’.

Spreadsheets can be used, but they must be combined with ‘bridging software’ to digitally link your data to HMRC. However, fully compatible software like Xero is generally recommended for ease of use.

HMRC has a points-based penalty system for late submissions under MTD. It’s important to stay on top of your quarterly updates to avoid accumulating points and eventual financial penalties.