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HMRC's Making Tax Digital for Income Tax changes how sole traders and landlords keep records and report to HMRC. Here is what is changing, when, and how to prepare.
With the rollout of HMRC's Making Tax Digital for Income Tax (MTD for IT), self-employed individuals and landlords in Scotland and across the UK are entering a new era of digital tax compliance. At Stratton Financial Limited, based in Perth & Kinross, we're here to ensure your business remains compliant, ready, and able to benefit from these changes.
MTD for IT is an HMRC initiative requiring sole traders, landlords, and business owners to keep digital records and submit quarterly updates, replacing the traditional single annual Self Assessment. The compliance deadlines are being phased in:
April 2026
Mandated for those earning over £50,000
April 2027
Earning over £30,000
April 2028
Earning over £20,000
If your total income from self-employment or property meets these thresholds, you'll need to use MTD-compliant software to keep records and file returns.
All business income and expenses must be recorded using HMRC-recognised software.
Submit your financial information to HMRC four times per year, with the first update for the 2026/27 tax year due by 7 August 2026.
After the tax year ends, you'll submit a final declaration by 31 January following the end of the tax year (e.g., by 31 January 2028 for 2026/27).
Using digital tools minimises manual errors and streamlines the entry of business data.
Frequent updates provide a real-time picture of your tax position, making it easier to forecast liabilities and manage cash flow.
Regular online updates break accounting into manageable tasks, eliminating the panic of the annual tax rush.
Select and implement approved digital accounting software that suits your business needs, such as Xero or similar.
Sign up through your chosen platform, not directly with HMRC—ensure your business and personal details are ready.
Familiarise yourself with digital record keeping well before your deadline for a smooth, hassle-free transition.
| Before April 2026 | After April 2026 | |
|---|---|---|
| Submissions | Single annual Self Assessment | 4 quarterly submissions + 1 final return |
| Filing Method | Paper or online | Via MTD-compliant software only |
| Record-Keeping | Paper allowed | Digital records required |
Submissions
Filing Method
Record-Keeping
While it's possible to manage MTD by yourself using the right software, working with a qualified accountant ensures your records are accurate, your planning is proactive, and you remain fully compliant.
You must submit quarterly updates for each business, but only one annual final declaration is needed.
If your total qualifying income drops below the threshold for three years, you may be exempt—but otherwise, MTD is mandatory once thresholds are met.
Early adoption of MTD-compliant software means less stress at deadline time, improved insight into your finances year-round, and more informed business decisions. As experienced accountants serving Perth, Perth & Kinross, and all of Scotland, Stratton Financial Limited can help you set up the right systems, train you on digital tools, and keep your transition smooth and compliant.
Disclaimer
This post provides general information about Making Tax Digital for Income Tax in Scotland and the UK. Specific requirements may vary based on your individual or business circumstances. Always consult with a qualified accountant or advisor—like Stratton Financial Limited—before taking any action or making financial decisions related to digital tax compliance.
Need help understanding how this applies to your business? Speak with our team for tailored advice.
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