Making tax digital (MTD) Letters
Have you received one?
You may have recently received a letter from HMRC about Making Tax digital for income tax Self Assessment (MTD for ITSA).
If it caught you off guard, you’re not alone.
Many sole traders and landlords are now being gradually drawn into this new digital era of tax reporting and it’s important to understand what is happening now and what actions from you may be required.
What is MTD for Income Tax?
MTD for ITSA is part of HMRC’s initiative to make the UK tax system more efficient and easier to get right. It requires eligible businesses and landlords to:
- Keep Digital Records of their income and expenses
- Use compatible software to submit quarterly updates to HMRC
- Submit a final end-of-period statement.
This new system will replace the traditional annual Self Assessment tax return for those within its scope
Why am I getting letters?
The letter you received is part of HMRC’s phased rollout. It’s being sent to those who meet the criteria for:
The first wave of MTD which starts April 2026:
- Sole Traders and Landlords with Gross Turnover of £50,000
The second phase starts in April 2027:
- Sole Traders and Landlords with Gross Turnover of between £30,000 and £50,000.
The third phase starts in April 2028:
- Sole Traders and Landlords with Gross Turnover of between £20,000 and £30,000.
HMRC is encouraging early preparation by nudging taxpayers with reminders, information, and key dates.
Key Points from the letter
- Start getting prepared for the changes if you are affected.
- Sign up for the last year of the expanded voluntary pilot phase happening now.
- Find compatible software for MTD
- Exempt? If for religious, age, disability or practical reasons on why you cannot sign up, you may be exempt. Contact HMRC directly to find out.
- Support is available: HMRC will be offering guidance, and software providers are developing software solutions for small businesses.
What Should you do Now?
- Check if you are affected? If your Gross annual income is £50,000 or more, MTD WILL be mandatory from April 2026.
- Consider going digital now, getting used to digital software now, will help you to transition earlier. You can still use spreadsheets but will need bridging software.
- Start getting your books up to date on a monthly or quarterly basis by the deadline dates. The Below table shows Tax year dates but can use calendar dates.
| TAX YEAR | |||
| QUARTERS | START | FINISH | FILE |
| 1 | 06-Apr | 05-Jul | 07-Aug |
| 2 | 06-Jul | 05-Oct | 07-Nov |
| 3 | 01-Oct | 05-Jan | 07-Feb |
| 4 | 06-Jan | 05-Apr | 07-May |
- Stay Informed: look out for communication updates from HMRC and your chosen software providers.
- Sign up to the pilot program if you want to get in early.
- Talk to us, we can help you prepare and advise of software.
Final Thoughts…
Making Tax Digital may feel like a big shift, especially if you’ve relied on paper or basic spreadsheets and HMRC filing direct until now.
Don’t leave it until the last minute and panic, with early preparation, the transition doesn’t have to be painful. Think of it as an opportunity to modernize your bookkeeping and gain a clearer view of your finances throughout the year whilst still able to remember what that receipt was for.
If you have any questions or need help with digital tools? Sign up for further updates or get in touch on hello@cooper-king.com for your free 30-minute discovery call with the intention of signing us as part of your team.
“Navigating tax is a team effort — not a solo mission.”
Research Sources
Work out your qualifying income for Making Tax Digital for Income Tax – GOV.UK