Making Tax Digital is HMRC's programme requiring digital record keeping and filing through software. This guide covers what it means, who it affects, and the income thresholds for MTD for Income Tax.
Published July 2026 · Updated July 2026
Making Tax Digital is a long running HMRC initiative to move tax record keeping and filing online. Instead of keeping receipts in a shoebox and typing totals into a form, you keep digital records and your software sends the figures to HMRC.
The aim is fewer errors, and more up to date visibility of what you owe.
This stage is already in force. Every VAT registered business must keep digital VAT records and file returns through MTD compatible software with a digital link to HMRC.
The next stage extends the same idea to sole traders and landlords through Self Assessment. Those in scope keep digital records and send quarterly updates to HMRC, then a final declaration after the year end.
It is phased in by income level: from April 2026 if your combined gross self employment and property income is over £50,000; from April 2027 if it is over £30,000; and from April 2028 if it is over £20,000.
The practical steps are to keep records digitally from the start of your first MTD year, choose HMRC recognised software, and get comfortable with quarterly updates rather than one annual scramble.
A sole trader earns £62,000 from self employment:
No. MTD changes how you keep records and file, not the tax rules themselves or the amount you owe.
Your combined gross income from self employment and property, before expenses. If you are both a sole trader and a landlord, the two are added together.
Any HMRC recognised MTD compatible software. Berified is being built to keep MTD ready digital records and file directly.
Source: GOV.UK ↗. This glossary is written for small business owners, so definitions are simplified. Tax rates and thresholds reflect 2026/27 UK rules and change over time. Berified does not provide accounting, tax or legal advice; always check the source or a qualified adviser.