Our MTD for Income Tax PDF Special Report provides a comprehensive overview of the forthcoming changes to tax compliance requirements for unincorporated businesses and landlords. The report outlines the practical steps you should take to prepare for MTD IT.

MTD IT will be introduced in two phases, beginning in April 2026 and April 2027. In the lead-up, HMRC is encouraging sole traders and landlords to participate in its MTD IT pilot, launched in April 2024.

The updated rules for digital record keeping and reporting represent a major shift in accounting practices, requiring many businesses and landlords to adapt their systems and processes.

Written in clear, accessible language and supported by real-world examples, this Special Report provides all the essential information to help you comply with MTD IT. Inside, you’ll find practical guidance on:

• Tax planning and profit management strategies
• Completing self-assessment under the new requirements
• The implementation timetable for MTD IT
• Ensuring your accounting systems are digitally compatible
• Meeting quarterly reporting obligations
• Understanding how these changes may affect your tax position

This PDF Special Report is designed to equip you with realistic, actionable advice and practical examples to help you navigate MTD IT successfully—without incurring unnecessary professional fees.

Table of contents Preface 1. MTD IT at a glance 1.1. What is MTD IT? 1.2. Who does MTD IT apply to? 1.3. Joining MTD IT 1.4. Quarterly submissions and end of year procedures 1.5. Deadlines 1.6. Records and MTD IT 1.7. MTD IT and tax bills 2. What is MTD? 2.1. What’s the timetable for MTD? 2.2. Who will MTD IT apply to and when? 2.3. Where can I find the legislation and HMRC guidance on MTD IT? 3. MTD IT basics 3.1. Will MTD IT apply to me? 3.2. When will MTD IT apply to me? 3.3. How do MTD IT requirements differ from those for MTDfV? 3.4. How will MTD IT change self-assessment reporting? 3.5. What is the MTD IT routine? 3.6. Are there advantages to MTD IT? 3.7. What’s in it for HMRC? 3.8. What checks will HMRC make? 3.9. Avoiding trouble with HMRC 4. Joining and leaving MTD IT 4.1. How are the mandation dates determined? 4.2. Who will be automatically exempt from using MTD IT? 4.3. Exemptions that can be applied for 4.4. Examples of when exemption might apply 4.5. What counts as MTD IT qualifying income? 4.6. My business started in 2025/26, when must I start using MTD IT? 4.7. How is income from abroad reported through MTD IT? 4.8. When can I leave MTD IT? 4.9. Is there a way to avoid or defer MTD IT? 4.10. How should I prepare for MTD IT? 4.11. How do I sign up? 4.12. Can I register for MTD IT before it becomes mandatory? 4.13. Will HMRC automatically include me in MTD IT? 5. Reporting requirements in detail 5.1. Quarterly submissions: what are they and how are they made? 5.2. How many submissions are required each quarter? 5.3. How accurate do the reports have to be? 5.4. What if I make a mistake? 5.5. What action will HMRC take after receiving a report from me? 5.6. How accurate will HMRC’s tax calculation be? 5.7. What’s the final declaration? 5.8. When do I make my final declaration? 6. Deadlines 6.1. What steps can I take to make MTD IT easier? 6.2. What periods will the quarterly submissions cover? 6.3. When must I file my quarterly reports? 6.4. What other deadlines are there? 6.5. Where can I find more information about deadlines and reporting? 7. Record-keeping requirements 7.1. What are the basic MTD IT record-keeping rules? 7.2. Should I use a bookkeeper or accountant? 7.3. What information must be recorded digitally? 7.4. Is any manual record keeping allowed? 7.5. How much bookkeeping do I need to do? 7.6. When must transactions be recorded digitally? 7.7. What are the requirements for MTD-compatible software? 7.8. How will my chosen accounting method affect my tax estimates? 7.9. Summary of accounting methods and MTD IT 7.10. What are the basic digital requirements? 7.11. Should I use cloud-based bookkeeping software? 7.12. Is digital record keeping sufficient for MTD IT? 7.13. What compatible software is currently available? 7.14. Are there special record-keeping solutions for cash accounting? 7.15. Can I use my own spreadsheet for MTD compatible record keeping? 7.16. How does a spreadsheet transfer the data to HMRC? 7.17. What non-tax issues should I consider? 7.18. Property rental businesses 7.19. What software should I consider if I use accruals accounting? 7.20. How soon should I start preparing my record keeping for MTD IT? 8. Calculating tax under MTD IT 8.1. Will I know how much tax I have to pay sooner? 8.2. When will I know what I owe? 8.3. Can I match quarterly estimates and annual bills? 8.4. How can I budget for tax? 9. Accounting - cash and accruals basis 9.1. What effect will the new cash basis accounting have? 9.2. How does cash accounting work? 9.3. How does accruals accounting work? 9.4. Which method will suit me? 9.5. How do I start using the cash basis? 9.6. Cash basis: is it right for me?