You may have heard about Making Tax Digital for Income Tax, but many business owners are still unsure whether it actually affects them.
The reality is that for some people, the changes are closer than they think.
From 06 April 2026, HMRC will introduce Making Tax Digital for Income Tax, which will change how certain self-employed businesses and landlords report their income.
And if you fall into that group, now is the time to start preparing.
Who Will Be Affected?
Making Tax Digital for Income Tax will apply to:
- Self-employed business owners.
- Landlords with property income.
…who have combined business or property income over £50,000 per year.
If that sounds like you, HMRC will require you to:
- Keep digital accounting records.
- Use approved software.
- Submit quarterly updates to HMRC.
Instead of submitting one Self-Assessment Tax Return each year, you will effectively be reporting your figures four times a year.
The first reporting periods will begin after 06 April 2026 and early submissions are expected shortly afterwards, potentially as early as July 2026 depending on your reporting period.
Spreadsheets and Paper Records May No Longer Be Enough
Many business owners still manage their finances with spreadsheets and folders of receipts.
That system might feel comfortable. But it can quickly become stressful when digital reporting requirements arrive.
Making Tax Digital means records must be kept digitally and submitted through compatible software.
While spreadsheets can technically still be used in some cases, they often require additional bridging software and can become difficult to maintain once submissions have been made.
In practical terms, most businesses will find cloud accounting software like Xero, or QuickBooks a far simpler solution.
These systems automatically record transactions, store receipts digitally and allow information to be submitted directly to HMRC.
What Should You Be Doing Now?
Although the new rules start from 06 April 2026, it makes sense to prepare before then.
Starting early allows you to:
- Choose the right accounting software.
- Set up your systems properly.
- Get comfortable using the software.
- Avoid last-minute stress as the deadline approaches.
At GreenStones, we are encouraging customers to begin preparing during the 2025/26 tax year where possible.
A few simple steps can make the transition much easier:
Set up separate bank accounts
Your business income and property income should flow through clearly designated accounts.
Keep personal and business spending separate
Mixing expenses between accounts makes digital record keeping far more complicated.
Keep your receipts
This is still the golden rule of bookkeeping. The difference is that many cloud systems now allow you to upload receipts instantly from your phone.
Could You Be Exempt?
Some individuals may be exempt from Making Tax Digital for Income Tax.
For example, exemptions may apply if it is not practical for you to use digital tools due to factors such as age, disability, location or religious reasons.
However, exemptions are not automatic and usually require an application to HMRC.
You can find more information here:
https://www.gov.uk/guidance/find-out-if-you-can-get-an-exemption-from-making-tax-digital-for-income-tax
The Best Time to Prepare Is Now
Making Tax Digital may still feel a little way off. But changing systems always takes longer than people expect.
Starting early gives you time to:
- Choose the right software.
- Learn how it works.
- Put the right processes in place.
- Avoid pressure as the deadline approaches.
And most importantly, it allows you to turn this change into something positive – clearer numbers, better systems and less stress around tax deadlines.
If you would like help preparing for Making Tax Digital for Income Tax, please contact the GreenStones team on 01733 371180 or email advice@greenstones.co.uk. We’re always happy to help.