Short video: Making Tax Digital for Income Tax explained

Making Tax Digital for Income Tax is a major change to how self employed individuals and landlords report their income to HMRC. Instead of submitting information once a year through a Self Assessment tax return, people within scope will need to keep digital records and provide updates to HMRC more regularly.

The aim of Making Tax Digital is to move tax reporting onto digital systems and give HMRC more frequent visibility of income and expenses. It does not change how much tax you pay or the reliefs available to you. However, it does change how and when information is reported.

In this short explainer video, we walk through how Making Tax Digital works, who it applies to, and what will change for self employed individuals and landlords over the next few years.

Key takeaways from the video

• Making Tax Digital for Income Tax requires eligible taxpayers to keep digital records and send updates to HMRC throughout the year

• The changes affect self employed individuals and landlords with qualifying income above certain thresholds

• Qualifying income refers to gross income before expenses from self employment and property combined

• Individuals with qualifying income above £50,000 must comply from April 2026

• The threshold reduces to £30,000 from April 2027 and to £20,000 from April 2028

• Instead of submitting one annual return, taxpayers will provide quarterly updates summarising income and expenses

• These quarterly updates are not tax returns and do not trigger tax payments

• A final declaration is still required after the tax year to confirm figures and finalise the tax position

• HMRC will apply a points based penalty system for late submissions under the new rules

• Digital record keeping typically means using compatible accounting software that connects to HMRC systems

What making tax digital means in practice

For many self employed individuals and landlords, tax reporting currently happens once a year. Records are gathered after the tax year and submitted through a Self Assessment return.

Making Tax Digital introduces a more regular reporting process. Taxpayers within scope will submit four updates each year covering three month periods, followed by a final declaration after the end of the tax year.

This approach gives a clearer picture of how income develops throughout the year and encourages consistent record keeping. It also means businesses and individuals will need systems in place to maintain digital records and meet reporting deadlines.

Learn more about making tax digital

If you would like to explore the rules in more detail, visit our Making Tax Digital hub, where we explain the requirements, timelines and practical considerations for businesses and landlords.

Speak to Gravita about making tax digital

If Making Tax Digital may apply to you and you want to understand what the changes mean in practice, our team can help you assess your position and prepare for the new reporting requirements.

Speak to your usual Gravita contact or get in touch with our team to start the conversation.