by Acuaccounts | Nov 19, 2025 | accounting, self assessment, selfemployed, tax
PLEASE NOTE: This article was updated in March 2026 to reflect the latest developments in Making Tax Digital for Income Tax.
From April 2026, a significant change to the UK tax system comes into effect. Making Tax Digital for Income Tax Self Assessment (MTD ITSA) will become mandatory for individuals with £50,000 or more in sole trade or property income. One year later, the threshold will reduce to £30,000, with further expansion expected in subsequent years.
This is not a new tax. It is a digital reporting requirement designed to modernise how income tax is recorded and submitted; reducing errors, simplifying record-keeping, and providing greater visibility over your financial position throughout the year.
This guide explains what is changing, what remains the same, and what you need to do now to ensure a smooth transition.
What MTD for Income Tax Means in Practice
Today, most sole traders maintain their records in a way that suits them, whether through paper records, spreadsheets, or basic bookkeeping tools, before submitting a single annual Self Assessment return each January.
Under Making Tax Digital for Income Tax, this approach changes. From April 2026, individuals above the threshold must keep accounting records digitally and submit quarterly updates to HMRC using compatible software. These updates are summary figures of income and expenses, not full tax returns.
At the end of the tax year, a final digital submission is required to confirm the overall position, replacing the traditional Self Assessment return.
In practice, this means moving from a once-a-year reporting process to a more regular reporting cycle throughout the year.
Importantly, payment deadlines do not change. Tax will still be due on 31 January and, where relevant, 31 July. MTD changes how information is reported, not when tax is paid.
For up-to-date guidance, HMRC provides detailed resources on Making Tax Digital for Income Tax.
Who Must Join, and When
MTD for Income Tax will be introduced in phases, based on your total qualifying income from self-employment and property.
From April 2026
- Sole traders with income over £50,000
- Landlords with income over £50,000
From April 2027
From April 2028 (planned)
Those earning below £20,000 are not currently required to join, although this may change as the system expands.
Businesses below the threshold can choose to adopt MTD voluntarily, which may offer improved financial visibility and more accurate tax forecasting.
What Income Counts Toward the £50,000 Threshold?
One of the most common areas of confusion is how HMRC calculates whether you fall within Making Tax Digital for Income Tax.
The threshold is based on your total gross income from:
- self-employment (sole trader income)
- property income (UK and overseas rental income)
Importantly, this is turnover, not profit.
This means:
- expenses are not deducted when assessing the threshold
- the figure is based on total income before costs
Examples
- A sole trader earning £52,000 in revenue (with £20,000 expenses) must join MTD
- A landlord earning £30,000 rental income and £25,000 from self-employment (total £55,000) must join MTD
- A sole trader earning £28,000 does not need to join in April 2026, but may be required from April 2027
What Does Not Count
The threshold does not include:
- employment income (PAYE salary)
- dividends from a limited company
- savings or investment income
Why This Matters
Many taxpayers assume they fall below the threshold because their profit is lower, but HMRC assesses eligibility based on gross income. This means some businesses may be required to comply earlier than expected.
If you are unsure whether you meet the threshold, AcuAccounts can review your income and confirm when you will need to comply.
Does This Apply to Limited Companies or Company Directors?
Making Tax Digital for Income Tax applies to individuals, not limited companies.
If you operate through a limited company, these rules do not apply to your company’s income or Corporation Tax obligations.
However, whether MTD applies to you personally depends on your sources of income.
MTD for Income Tax applies to personal income, which means:
- Salary paid through PAYE → not included
- Dividends from a limited company → not included
- Corporation Tax → not affected
You may still need to comply if you have:
- self-employment income outside your company
- rental income from property (UK or overseas)
If your combined income from these sources exceeds the threshold, you will need to follow MTD for Income Tax rules — even if you also run a limited company.
Limited companies are already subject to Making Tax Digital for VAT, where applicable. HMRC is also developing Making Tax Digital for Corporation Tax, although no mandatory start date has been confirmed.
Common Misunderstandings About MTD, and the Reality
Since HMRC announced the phased rollout, a number of misconceptions have caused confusion. Below are some of the most common — and what they mean in practice.
“I will have to pay tax four times a year”
You will not. Quarterly updates are for reporting purposes only. Payment deadlines remain unchanged, with tax still due on 31 January and, where applicable, 31 July.
“I can wait until HMRC signs me up”
HMRC will contact taxpayers who fall within the threshold, but it remains your responsibility to prepare and ensure you are compliant. Leaving this until the deadline increases the risk of errors, penalties, and last-minute disruption.
“This will create more work”
For most businesses, the opposite is true. Maintaining digital records throughout the year spreads the workload more evenly, reducing the pressure and uncertainty that typically builds ahead of the January deadline.
“It will be expensive to comply”
While there may be some initial adjustment, many businesses find that digital record-keeping simplifies their processes and reduces time spent on administration. The focus should be on establishing an efficient and sustainable bookkeeping routine.
“It will complicate VAT submissions”
MTD for Income Tax is designed to align with existing digital VAT requirements, not duplicate them. Businesses already using digital VAT systems will find many of the processes familiar.
Why Acting Now Makes a Difference
With April 2026 approaching, businesses that fall within the £50,000 threshold should now be finalising their approach to Making Tax Digital for Income Tax.
The focus at this stage is not preparation, but ensuring your processes are in place and working.
- Review your current record-keeping
Your records should already be maintained digitally in a consistent and structured way. If you are still relying on spreadsheets or manual processes, this should be addressed immediately.
- Ensure your records are up to date
Quarterly reporting requires accurate, up-to-date records. Any backlog should be cleared now to avoid issues when submissions begin.
- Establish a regular bookkeeping routine
MTD requires ongoing record-keeping throughout the year. A monthly or weekly routine will ensure your records remain accurate and ready for submission.
- Confirm how quarterly submissions will be handled
Decide whether you will manage submissions yourself or work with your accountant. This should be agreed in advance to avoid confusion once reporting begins.
- Review your systems and processes
If you use multiple tools or systems, ensure they work together efficiently and support digital record-keeping without manual re-entry.
- Speak to your accountant if you are unsure
If you are not confident that your current setup meets MTD requirements, now is the time to review it. Addressing this before April avoids unnecessary disruption and potential compliance issues.
At this stage, the goal is simple: ensure your records, processes, and responsibilities are clear so that the transition into MTD is smooth and controlled.
How AcuAccounts Can Support Your Transition
AcuAccounts supports sole traders and landlords in moving to Making Tax Digital in a structured and practical way — ensuring compliance without unnecessary complexity.
We work with you to:
- review your current record-keeping and identify what needs to change
- establish a clear and sustainable bookkeeping process
- ensure your records are ready for quarterly reporting
- clarify your obligations and reporting timeline under MTD
To suit different working styles and levels of involvement, we offer three levels of support:
Tier 1 – Compliance Review
Client-led with year-end support
- You maintain your bookkeeping
- You prepare and submit quarterly updates
- We review your records at year end
- We prepare and submit the final end-of-year declaration
This option is suitable for clients who prefer to remain hands-on while ensuring year-end compliance.
Tier 2 – Quarterly Accountant Review
Shared responsibility
- You maintain your bookkeeping
- We review your records quarterly
- We prepare and submit the quarterly updates
- We prepare and submit the final end-of-year declaration
This is typically the most popular option, providing a balance between cost and professional oversight.
Tier 3 – Fully Managed
Complete accountant-led service
- We maintain your bookkeeping
- We prepare and submit all quarterly updates
- We prepare and submit the final end-of-year declaration
This option is ideal for clients who want their compliance fully managed you are confident managing your records or prefer full support, we can structure the process in a way that works for your business
📩 info@acuaccounts.com
📞 0203 907 9027
Prepare early, stay digital, and ensure you are ready for April 2026 without the last-minute pressure.
Also starting on November 18th Identity verification for directors, PSCs and LLPs is now required.
Learn what you must do to stay compliant in our other article here.
by Acuaccounts | Dec 21, 2022 | accounting, latest news, r&d credits, self assessment, selfemployed, tax return
The 2022 Autumn Statement by chancellor Jeremy Hunt reversed several policies introduced with the previous mini-budget by his predecessor Kwasi Kwarteng, as well as changing several thresholds that apply to businesses and the self-employed.
The autumn budget freezes the VAT threshold for businesses at £85,000, which with the current price rises will likely make VAT registration mandatory for more small businesses. Similarly, the personal tax allowance freeze at £12,570 was extended from 2026 to 2028, which with rising wages will move more people into higher tax brackets.
Reduced thresholds and allowances in 2023, 2024 and beyond
Two annual tax-free allowances that frequently apply to company owners and directors will be reduced in 2023-24: the dividend allowance and capital gains tax allowance.
The dividend allowance applies to directors paying themselves partially or entirely in dividends. The tax-free amount will be cut from £2,000 to £1,000 in 2023-24, then to £500 in 2024-25. The capital gains tax allowance, that applies for example, for sales of business assets will be cut from £12,300 to £6,000 in 2023-24, then to £3,000 in 2024-25.
Changes to business rates and energy bills for businesses
From 1 April 2023, business rates will be updated to reflect changes in property values since the previous evaluation in 2017. To support changes in business rates, the UK government has disclosed a targeted support package worth £13.6 billion over five years.
Furthermore, the Energy Bill Relief Scheme for businesses will remain in place until 31 March 2023. The government will introduce more targeted support on energy bills for the most vulnerable businesses from April 2023.
Increase in national living wage and reduction in research and development tax relief
The government has announced that the national living wage will increase from 1 April 2023, from the current rate of £9.50 per hour to £10.42 per hour for employees aged 23 and over. The UK minimum hourly wage for employees aged 21 to 22 will increase from £9.18 to £10.18, and the rate for employees aged 18 to 20 will increase from £6.83 to £7.49.
Research and development tax relief supports companies carrying out R&D projects related to their trade or business sector. However, in an effort to reduce fraud, the rate for small businesses will be reduced to 86 per cent, and the credit rate will be reduced to 10 per cent. The rate of the separate research and development expenditure credit will increase from 13 per cent to 20 per cent.
How to file your self-assessment correctly in 2023
With the self-assessment deadline less than a month and a half away, we review who needs to file for self-assessment and how it works.
You need to file for self-assessment in the UK in 2023 if any of the following apply:
- you have earned more than £1,000 from self-employment income
- you have earned from than £2,500 from renting property
- you have earned more than £2,500 in untaxed income like tips or commissions
- you have earned more than £10,000 from savings or investments
- you are a company director
- your taxable income was over £100,000
- you have earned income abroad that you need to pay tax on, or you live abroad but have an income in the UK
- you owe capital gains tax on profits from selling things like shares or a second home
- additional conditions as outlined on the government website
You can find the full list of conditions for self-assessment and check if you need to file a self-assessment tax return at https://www.gov.uk/self-assessment-tax-returns/who-must-send-a-tax-return
To file a self-assessment tax return, you will need to gather the following information:
- your National Insurance Number and your ten-digit Unique Taxpayer Reference (UTR)
- detailed information about any untaxed income from the tax year, including your income from self-employment, dividends and interest on shares
- records of any expenses relating to your self-employment
- any contributions to charity or pensions eligible for tax relief
- your P60 or any other records showing any income you received and have already paid tax on
For any questions on how to prepare the information about your untaxed income, what can and cannot be expensed, or to book a full self-assessment service feel free to get in touch with our team at info@acuaccounts.com or on 0203 907 9027.
Keep track of your monthly and yearly tax and payment deadlines in 2023
In the UK, there are several important tax deadlines for businesses throughout the year.
Here are some of the key deadlines for the calendar year 2023:
- Self-Assessment Tax Return deadline: 31 January 2023 for the tax year that started on 6 April 2021 and ended on the 5 April 2022
- VAT Return deadline: Every 7th of the month following the end of the VAT period
- Corporation Tax Return deadline: 9 months and 1 day after the end of the company accounting period
- Payroll deadlines: Real Time Information (RTI) submissions must be made to HMRC on or before the date that payment is made to the employee
Review the monthly and quarterly tax deadlines in 2023:
Monthly Tax Deadlines
- On the 1st of the month: Corporation Tax payment for the tax year ending nine months prior (for example on January 1 2023 the Corporation Tax payment for tax year ending 31 March 2022 will be due)
- Every 7th of the month: VAT return submission and payment (online) if your business payment cycle is month-end
- Every 21st of the month: PAYE, NIC and CIS payment (electronic) for month-end 5 January 2022 and quarter-end 5 January 2022
Quarterly Tax Deadlines
- Due on the 21st of every three months: PAYE, NIC and CIS payment (electronic) if your company pays quarterly
Do you have questions about the recent updates and changes from the Autumn Statement? Any concerns about how to manage your taxes and business in 2023 or do you need help to submit your self assessment tax return?
Have a look at our services and feel free to get in touch with us. You can book a consultation at info@acuaccounts.com or call us directly on 0203 907 9027.
by Acuaccounts | Dec 7, 2020 | accounting, self assessment, selfemployed, tax, tax return
Self assessment is how HM Revenue and Customs (HMRC) collects income tax not automatically deducted from wages, pensions and savings. People and businesses with other income must report it in a tax return.
Company directors, self-employed or members of partnerships need to file for self assessment. Likewise, if you have made additional untaxed income of more than £2,500 for example by renting out property, you will also have to file for self assessment.
When is the 2019/2020 self assessment due?
Your self assessment tax return for the tax year which started on 6 April 2019 and ended on 5 April 2020 is due by Midnight January 31st 2021 if you file online. The deadline for filing a paper return was October 31st 2020. Furthermore, the tax you owe will also be due on January 31st 2021.
If you have never submitted a return before, you will first need to register for Self Assessment. It can take up to 20 working days for receiving your Unique Taxpayer Reference (UTR) in the post.
There are different ways to register if you’re self-employed, not self-employed but need to declare income, or if you’re in a partnership. The registration for 2019/2020 should have happened by 5th October 2020. To register you need your National Insurance (NI) number and personal and business details.
Who needs to file for self assessment?
You will need to file for self assessment in the following cases:
- your self-employment income was more than £1,000
- you are a director of a company (unless it was a non-profit organisation, such as a charity)
- your income from renting property exceeded £2,500
- you earned more than £2,500 in untaxed income, for example from tips or commissions
- your income from savings or investments was £10,000 or more before tax.
- you need to pay Capital Gains Tax on profits from selling things like shares
- you or your partner’s, income was over £50,000 and you’re claiming Child Benefit
- you have income from abroad you need to pay tax on, or you live abroad but have an income in the UK.
- your taxable income was over £100,000
- if you earn over £50,001 in the 2019/20 tax year (£50,001 for 2020/21) and make pension contributions you may have to complete an assessment to claim back the extra tax relief you’re owed
- you are a trustee of a trust or registered pension scheme
- your State Pension was more than your personal allowance and was your only source of income
- you received a P800 from HMRC saying you did not pay enough tax last year.
You can check if you need to file a self assessment using the government website at https://www.gov.uk/check-if-you-need-tax-return
At AcuAccounts we work to integrate the information from your company or sole trader accounts into your tax self assessment return. We will also factor in income from other investments, land or property and overseas assets if applicable.
What documents do you need to file for a personal tax return?
In order to file for self assessment online you will need to prepare the following documentation:
- your 10-digit Unique Taxpayer Reference (UTR)
- your National Insurance (NI) number
- Details of all your untaxed income from the tax year, including income from self-employment, dividends and interest on shares
- records of any expenses relating to self-employment
- any contributions to charity or pensions which might be eligible for tax relief
- P60 or other records showing how much income you received which you’ve already paid tax on
Self assessments can be filed either by yourself or by an authorised agent on your behalf, like AcuAccounts.
What is the difference between a personal tax return for self-employed and company directors?
As self-employed, you complete a self-assessment tax return and tell HMRC what profit you have made during that tax year and then you pay tax on this profit. Self-employed record expenses via the self-assessment and are taxed on profits.
In a similar fashion, limited company directors will run expenses through their limited company. A Limited Company pays tax from the moment it makes £1 in profit. However, directors can extract personal income from the Limited Company in the form of salary and dividends. This will be included in the limited company director self assessment, where the personal allowance applies.
How much tax can I expect to pay as a self-employed?
HMRC calculates Income tax for the self-employed on profits plus any other income. As self-employed you pay tax on any earnings that exceed the personal allowance. Business expenses from your self-employed work can be offset against your income from self-employment, reducing your tax bill.
The standard personal allowance for 2019/2020 was set at £12,500, which is the amount of income a person can get before they pay tax.
Can self assessment tax be paid in instalments?
You might be able to pay the bill in instalments, depending on whether you need to make payments against your latest bill or want to make advance payments against your next bill.
According to information on the HMRC website, you can set up a payment plan to spread the cost of your latest Self Assessment bill should you owe £30,000 or less or do not have any other payment plans or debts with HMRC.
It must be remembered that in case you don’t keep up with your repayments, HM Revenue and Customs (HMRC) can ask you to pay everything you owe. Not to mention you can set up a budget payment plan if you want to put aside money to cover your next Self Assessment tax bill ahead of time.
What is next?
You can file your tax return online on the HMRC website or get in touch with us to book a self-assessment consultation at info@acuaccounts.com or by calling us directly on 0203 907 9027.
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