MTD for IT: everything you need to know before the next tax year

Making Tax Digital for Income Tax (MTD for IT) is almost here.

For many accountants supporting self-employed clients or landlords, that means preparation time’s running out.

So, what must you know right now?

We have put together a Q&A with all the answers.

When does MTD for IT apply to your clients?

This depends on what they earn. From April 2026, MTD will be compulsory for clients with income over £50,000 from self-employment or property. 

This threshold drops to £30,000 in April 2027.

The majority of remaining clients will likely be covered when the income threshold drops to £20,000 in April 2028.

So, some clients will need to be prepared immediately, others a little later. But now is the time to get to grips with the rules and start segmenting your client base.

How is income calculated to decide if MTD for IT applies?

The MTD thresholds apply to the combined total of self-employment and property income. For example, a client earning £55,000 from a mix of these sources will be in scope from April 2026. If their self-employment and property income combined are below this threshold, they will not fall under MTD.

This is true even if they have other income streams. Partnership income, employment income, and interest do not count towards the MTD threshold. Only self-employment and property income are relevant.

Under MTD for IT, what is the “new normal” for accountants?

MTD introduces a new rhythm to tax reporting: quarterly submissions.  

Every client over the threshold will need to submit updates every three months.

If a client has multiple trades, each one requires its own quarterly submission. For property, it is one submission per quarter, regardless of the number of properties.

The filing deadlines are usually on the seventh of the month.

For a financial year, these are as follows;

• Quarterly submission one’s deadline (covering 6 April to 5 July) is 7 August.
• Quarterly submission two’s deadline (covering 6 April to 5 October) is 7 November.
• Quarterly submission three’s deadline (covering 6 April to 5 January) is 7 February.
• Quarterly submission four’s deadline (covering 6 April to 5 April) is 7 May.

You can elect to do this by calendar quarters, but if you do, the deadlines are the same.

For clarity, here’s how MTD for IT works under calendar quarters:

• Quarterly submission one’s deadline (covering 1 April to 30 June) is 7 August.
• Quarterly submission two’s deadline (covering 1 April to 30 September) is 7 November.
• Quarterly submission three’s deadline (covering 1 April to 31 December) is 7 February.
• Quarterly submission four’s deadline (covering 1 April to 31 March) is 7 May.

Quarterly submissions are cumulative, so anything you need to rectify only has to be changed in the next submission. You don’t need to go back and amend anything.

Can only one accountant work on a client’s MTD for IT data?

No, multiple agents can be involved. That means different experts managing different aspects of a client’s affairs can log on and update information.

When you register a client on the Agent Services Account (ASA) for MTD for IT (see our guide for accountants), you are able to ask to be either:

1. a main agent or
2. a supporting agent

This choice decides which parts of a client’s records you can view and what tasks you can carry out on their behalf.

Let’s see how this would work for a sole trader that has a bookkeeper and an accountant. The bookkeeper is a supporting agent. They can complete and submit quarterly updates. The trader’s accountant, meanwhile, is the main agent. They can complete the year end submission in their tax return.

Is there still something to be submitted after the end of the tax year?

Yes. In addition to quarterly updates, an end-of-year submission is required, due by 31 January following the tax year. So, for the 2026/27 tax year (ending 5 April 2027), your final declaration must be submitted by 31 January 2028.

This is for the other income and reliefs that an individual may receive other than from self employment or property rental. This includes interest, dividends and employment.

This also includes any adjustments and allowances for each business. Examples are for capital allowances and non-business income.

This submission is followed by a final calculation returned by HMRC. The agent must finalise against this.

When you add this process to the quarterly updates, the administrative burden is real. But with the right processes in place, it can be managed.

What are the penalties under MTD for IT?

At the time of writing, late submissions will accumulate penalty points. However, this is an area that requires clear, final guidance from HMRC.

Rather than share any information that might cause unnecessary confusion, we recommend you check the HMRC website as the key dates approach.

Why not leave everything until the quarterly MTD for IT submissions start?

Preparation should not be left until the last minute.

Each client must be signed up individually, and the process can take several minutes per client. Multiply that across your portfolio, and the work adds up.

It is also important to educate clients about what is changing and why. Many may not be aware that anything is happening. This too, of course, takes time and will add to your workload.

If you segment your clients now, based on income sources, the transition will be smoother.

Who’s exempt from MTD for IT?

There are some automatic exemptions. These apply to people in unique situations, such as foster carers or if someone doesn’t have a National Insurance Number. This move simplifies the process for individuals who previously were required to apply for exemptions.

One exemption you do still have to apply for is for “digitally excluded” people. This is where factors like age, health or a disability stop you from using a computer. The exemption can also apply to religious beliefs that affect computer use or to people who cannot access the internet because of their location.

What does the MTD for IT sign-up journey look like?

There are steps accountants need to take from the outset. Skipping or rushing these is likely to cause problems later on.

These include:

• Segmenting clients by income and eligibility
• Discussing the pilot and mandation with clients, using educational materials where possible
• Ensuring you have an Agent Services Account (ASA).
• Checking all clients are transferred from any old Government Gateway accounts.
• Signing each client up for MTD through HMRC, well ahead of the deadline

Once these are done, you can authorise your software using your ASA credentials. From there, you are able to manage obligations digitally.

Don’t miss our guides for this process.

What about partnerships and corporation tax under MTD? Should I also be thinking about these types of clients?

A couple of legislative updates are worth noting.

While partnerships (SA800s) are expected to join MTD in the future, HMRC has not yet confirmed the timeline. Meanwhile, plans to bring corporation tax into MTD have been dropped. Instead, HMRC is moving towards a standardisation review for corporation tax. This will affect how vendors present computations, but not through MTD itself.

Is MTD for IT a “one and done” exercise?

MTD for IT means you must stay alert. Regular checks are highly recommended.

Clients who fall below the threshold for three consecutive years will drop out automatically. You may also need to remove clients who don’t need to adhere to MTD before then in order to save time, effort and cost.

Do my clients and I need special software for MTD for IT?

Yes, both accountants and clients need HMRC-recognised software for MTD. Clients can keep their records in bookkeeping software or spreadsheets. However, all submissions to HMRC must go through MTD-compatible software. This includes quarterly updates and the final declaration. If you use more than one system, they must be digitally linked (no manual copy-and-paste).

HMRC will not be developing software for this purpose.

What software do you need?

As we mentioned briefly in the last section, HMRC has a recognition process. This checks which software can send tax returns under MTD.

The good news is that IRIS solutions are MTD-ready right now. These updates have been added at no extra cost.

Whether you are using IRIS Elements or the IRIS Cloud Accounting Suite, the tools are in place to help you and your clients stay compliant. For practical guidance, checklists, and updates, our Accountancy MTD Hub is your go-to resource.

If you are interested in upgrading your software, see our solutions.