Making Tax Digital

What is Making Tax Digital (MTD)?

HMRC have introduced MTD for people who are self employed or receive income from rental properties.

Anyone who qualifies will need to file their accounts on a quarterly basis using a compatible software in addition to an annual Tax Return.

The 2025/26 tax year is an important year for MTD as HMRC will look at individuals’ income in this year and anyone over the threshold will be required to fill quarterly reports.

Does MTD apply to me?

MTD is being slowly introduced over the next few years.

For the 2024/25 tax year, if your total gross income from your self employment and/or rental properties is in excess of £50,000 you will qualify for MTD.

For the 2025/26 tax year, the threshold is lower at £30,000 and reduced even more for the 26/27 tax year at £20,000.

The threshold applies to your total gross income before any expenses have been deducted.

If you have income from both your self employment and rental properties, this will be the gross total of both incomes together.

How do I submit my accounts for MTD?

You will be required to keep digital records of your income. At Stratos, we will be able to support you through this change. We can prepare your digital records and submit your quarterly reports on your behalf, taking the stress of this change away from you.

When are the deadlines for submitting each quarterly report?

The following dates will apply from 6 April 2026:

• For Quarter 1, the filing deadline is 7th August;
• For Quarter 2, the filing deadline is 7th November;
• For Quarter 3, the filing deadline is 7th February;
• And lastly, for Quarter 4, the filing deadline is 7th May.

Missing a filing deadline will not automatically result in a late filing penalty.

You will receive a ‘point’ each time a deadline is missed. These points accumulate until you reach the threshold, and a penalty of £200 will be issued.

Who is exempt from MTD for Income Tax?

At the moment, HMRC have advised only people who are self employed and/or have rental properties qualify for this change.

Trusts and Estates and trustees are not required to file quarterly reports. At the time of writing, HMRC have not advised on when Partnerships will be included in MTD.

If you are a member of a partnership or LLP, you will not qualify for MTD unless you have other income that would qualify.

Digital exclusions will also apply. If a person is unable to keep digital records due to their age, disability or for religious reasons they will be exempt from MTD.

If you are Power of Attorney to someone who is above the threshold, they will be exempt from MTD.

Will I still be required to file a Self Assessment Tax Return?

As the quarterly reports will only include information from your self employment and/or rental income, you will also need to complete a digital tax return. This will be due after the fourth quarterly report has been submitted.

This is similar to the current Self Assessment tax return. The digital tax return will also include any other income you have received in the tax year, such as employment income, interest or investment income. You will also be able to claim relief on this tax return, such as pension contributions or gift aid.

What do I do if I have both property income and are self employed?
As you will be required to keep digital records for your rental properties and your self employment separately, you will need to report both separately.

This will result in you filing eight quarterly reports throughout the year.

Our joint property is above the threshold, do we need to file quarterly reports?

HMRC will only look at your share of the rental income.

So if the joint property receives income of £50,000 but your share of the income is £25,000, you would be below the threshold.

If you believe that you will qualify for MTD, please do not hesitate to contact Stratos and we can discuss how we can help you.

Why Stratos?

At Stratos, we combine technical expertise with a practical, client-focused approach to make MTD compliance simple and reliable. We help you implement the right digital processes, submit accurate returns, and stay fully compliant, while working alongside your existing advisors to ensure everything is coordinated and hassle-free.