Here at Bryden Johnson we wanted to inform you about an upcoming HMRC initiative called ‘Making Tax Digital for Income Tax’ or ‘MTD for IT’ for short. It is a new mandatory system for income tax reporting that will affect how you report income to HMRC.
Starting from April 2026, all self-employed individuals and landlords with gross annual income of more than £50,000 will be required to keep digital records and submit quarterly updates to HMRC using compatible software.
This change aims to make the tax system more efficient and closer to real-time. We can help prepare you for these changes and provide the required services and support to help you meet your new obligations.
The key points to note are as follows:
Sign up
Although HMRC will let you know whether or not you come into the regime there will still be a sign up process – they will not move you to the new system automatically.
We can support with this if required.
Digital Record Keeping
You will need to maintain digital records of your rental income and expenses.
We can provide solutions and support with this.
Quarterly Updates
You will be required to submit quarterly figures for your rental income and expenditure to HMRC via digital means.
We can discuss the process with you and suggest way in which we can work together.
Compatible Software
The regime includes a requirement to use software that is compatible with HMRC’s MTD platforms to manage your records and deliver both the quarterly submissions.
We can help to ensure that appropriate software is employed to service your reporting obligations. We can also provide guidance on selecting the right software and training on how to use it, if required.
What does it mean for you?
You will be required by law to:
Keep and retain transaction-level (income and expenses) digital records for each property
business.
Submit quarterly update reports of your year-to-date transactions for each self-employment
and/or property business to HMRC.
Finalise your end-of-year position by providing details of your other personal income sources,
making adjustments, claiming reliefs and submitting your digital tax return to HMRC.
Starting with the 2026/27 tax year (April 2026), this process will be in addition to your annual self-assessment tax return. Failure to comply with the new rules will result in financial penalties.
There will be no changes to your income tax payment dates.
When does this change impact you
HMRC are writing to those they think will come within MTD from 2026/27, so you are likely to receive a letter from them over the next few months if you have not already. Their initial letter is only intended to raise awareness and does not necessarily mean you are mandated from April 2026. If your rental income is indeed over £50,000 for 2024/25 they will contact you again to confirm that you will come into the new regime from April 2026.
Bryden Johnson can ensure that you are using an appropriate digital record-keeping system from 6 April 2026 and are ready to submit the first quarterly update report for the 2026/27 tax year, due on 7 August 2026.
What is compatible software and is HMRC providing it?
HMRC will not be providing software, but it’s important to note that the new requirements may not necessarily require a change in the systems that you are currently using. If changes are required to ensure your systems are compliant, various types of MTD-compatible software will be available.
Why are HMRC doing this?
HMRC are introducing this new requirement with the intention of improving record keeping and tax accuracy, thereby reducing tax loss to the exchequer. Unfortunately, the rules are being applied to everyone within the set criteria, regardless of how good their current records are.
It could be an opportunity to review your current processes to identify any advantages that can be achieved through the use of ‘compatible software’. For example, many clients value cloud record keeping, which assists with strategic planning due to real-time data.
What are the next steps?
We will be reaching out to our clients, giving us plenty of time to prepare, explore options and find a solution that works for you. We have lots of experience in handling HMRC digitalisation requirements and have previously supported many of our clients when a similar regime was introduced for VAT.
You can read more about HMRC’s MTD for IT initiative here:
Depending on your current record-keeping system and VAT status, there may be more work involved so please do not hesitate to get in touch.