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Written by Matchouse
Read more about our contributorKey Facts
- From April 2026, HMRC will enforce Making Tax Digital for Income Tax Self Assessment (MTD for ITSA).
- Professionals earning over £50,000 annually must comply first, followed by those earning £30,000+ in April 2027.
- Traditional yearly tax returns will be replaced by quarterly digital updates.
- Only MTD-compatible software can be used to report income and expenses.
- Late or incorrect filings may lead to financial penalties and disruptions.
🌱 Introduction
If you're a self-employed professional in the UK — whether you're a plumber, gardener, tutor, or digital marketer — you need to be ready for Making Tax Digital (MTD). This shift from annual tax returns to digital, quarterly updates will impact how you manage your finances.
Let’s break it down so you can prepare and stay confident.
1. What is Making Tax Digital for Income Tax?
Making Tax Digital is HMRC’s initiative to make tax reporting more efficient and error-free. Instead of one big annual return, self-employed individuals will now submit:
- Quarterly updates
- A year-end statement
- A final declaration confirming total tax liability
Key Fact: HMRC introduced MTD to reduce tax errors and streamline the reporting process. But it means more admin for self-employed workers.
2. Who Does It Affect and When?
| Start Date | Who It Applies To | Income Threshold |
|---|---|---|
| April 2026 | Self-employed individuals & landlords | £50,000+ |
| April 2027 | Self-employed individuals & landlords | £30,000+ |
Disclaimer: If your self-employed income is under £30,000, you won’t need to comply with MTD — yet. But changes are likely coming, so stay informed.
3. What Changes for Self-Employed Professionals?
Here’s how your tax routine will change:
- Submit digital updates to HMRC every quarter
- Keep digital records of your income and expenses
- Use approved accounting software
- Submit a year-end summary and declaration
4. What Software Do You Need?
You’ll need to use HMRC-approved software to comply with MTD rules.
TIP: FreeAgent is available free if you bank with NatWest, Mettle or RBS — perfect for freelancers on a budget.
Popular options include:
- FreeAgent
- QuickBooks Self-Employed
- Xero
- Zoho Books
- Sage Cloud Accounting
- 1Tap
5. Key Dates You Can’t Miss
- Now: Start tracking expenses digitally and explore accounting tools
- April 2026: MTD is mandatory for those earning over £50,000
- April 2027: MTD is mandatory for those earning over £30,000
6. Pros and Cons of MTD
| Pros | Cons |
|---|---|
| More accurate record-keeping | More frequent admin tasks |
| Fewer tax return errors | Learning curve for new tools |
| Real-time view of tax owed | Paid software may be required |
7. How to Prepare Now
- Sign up for the HMRC pilot program if available
- Choose and test a compatible software solution
- Start keeping digital records today
- Get help from a tax advisor or bookkeeper
- Keep up with Matchouse for helpful reminders and guides
Important: Preparing early can save you time, money, and stress — and you’ll be less likely to miss future deadlines.
📈 Key UK Stats
- Over 4.3 million people in the UK are self-employed
- 1.6 million+ UK businesses already use MTD for VAT
- HMRC loses billions annually due to simple tax reporting mistakes
Self-Employed? Let Matchouse Help You Stay Ahead
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