Making Tax Digital for Income Tax: what it means and what to do now
The Sampson Fielding team in action
Making Tax Digital explained
Making Tax Digital (MTD) for Income Tax is one of the biggest changes to the UK tax system in recent years.
From April 2026, many individuals and businesses will need to move from an annual tax return to a system of quarterly digital reporting.
For some, this will feel like a significant shift. For others, it is an opportunity to gain better visibility over income, tax and cash flow throughout the year.
At Sampson Fielding, we are already working with clients across Central London and the UK to manage these changes — particularly business owners, property investors and individuals with multiple income streams.
Who does Making Tax Digital apply to?
From 6th April 2026, MTD for Income Tax will apply to individuals with:
Self-employed income
Where total income from these sources exceeds £50,000.
This threshold will reduce to £30,000 from April 2027.
Why this matters
This is not limited to large businesses.
We are seeing many founders, consultants and growth-stage SMEs fall within scope — often those combining freelance income with rental income or side ventures.
For property owners, even one or two properties can bring you into MTD depending on rental levels.
What changes under Making Tax Digital?
Under MTD, the way you report income to HMRC changes significantly.
Instead of one annual Self Assessment return, you will need to:
Keep digital records
Submit quarterly updates
Submit a final year-end declaration
Why this matters
This moves tax from a once-a-year exercise to an ongoing process.
The benefit is that you have a much clearer view of:
How your business or property portfolio is performing
What your likely tax position is
How much cash you should be setting aside
What records do you need to keep?
MTD requires you to maintain digital records of your income and expenses using compatible software.
This includes:
Income received
Business or property expenses
Dates and categories of transactions
Why this matters
We often see clients with disorganised records, which leads to:
Missed claims
Inefficient tax positions
Unnecessary stress
With digital records kept up to date, you move from reconstructing the past to actively managing the present.
Do you need new software?
Yes — MTD requires the use of HMRC-compatible digital software.
Why this matters
Choosing the right system is not just about compliance, it is about finding something that fits how you work. As chartered accountants and business advisors, we are well placed to help you find the right solution, just speak to one of the team.
For example:
A consultant may need something simple
A property investor may need portfolio-level tracking
A growing business may need reporting and forecasting
How will making tax digital affect cash flow?
One of the biggest changes is visibility.
With quarterly reporting, you will have a clearer, more regular view of your tax position.
Why this matters
Many people are used to receiving a tax bill once a year — often as a surprise.
With MTD, you are much more aware of your position throughout the year.
This allows you to:
Set aside tax more consistently
Avoid large, unexpected liabilities
Plan income and expenditure more effectively
What about personal tax and self-assessment?
Even under MTD, you will still need to submit a final declaration at the end of the tax year.
Why this matters
If you have multiple income streams — for example:
Salary
Dividends
Rental income
Freelance income
It becomes more important to understand how everything fits together.
MTD increases reporting frequency, but it does not simplify the underlying tax rules.
How we support clients with Making Tax Digital
At Sampson Fielding, we work with individuals, property investors and businesses across Central London and the UK to manage MTD.
Our approach combines:
We focus on making sure clients are not just compliant, but better informed and better prepared.
If you would like support preparing for making tax digital 2026, the team at Sampson Fielding - London-based chartered accountants and business advisors - would be delighted to help. Please just email the team at info@sampsonfielding.co.uk
