Making Tax Digital (MTD) for Income Tax – what do you need to know?

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Making Tax Digital (MTD) for Income Tax begins on 6 April 2026 and initially applies to self-employed individuals and landlords with qualifying income over £50,000.

If your income is under £50,000, it will not apply until either April 2027 or April 2028, depending on your level of income. In time, it will affect most self-employed individuals as HMRC moves to a fully digital reporting system.

If you are a dental associate or a practice owner (doing NHS and/or Private work) and operating as a sole trader, it is very likely you will be affected.

MTD requires you to keep digital records and provide quarterly updates on your income and expenditure to HMRC through MTD-compatible software, as well as a final declaration. This includes your NHS income, private income, lab fees, professional fees, insurance - everything you’d typically include within your annual self-assessment tax return.

Preparing for Making Tax Digital

You might be thinking: “So, what does this actually mean, and what do I do?” You won’t be alone.

Firstly, consider when to register for MTD. Registration can be tricky, and you need to ensure you're eligible. Registering too early or registering incorrectly can have ongoing consequences, as opting out is generally not an option. Professional support from the outset ensures everything is established correctly from day one, saving time, reducing risk, and keeping compliance on track.

You may now also want to look into HMRC-approved MTD-compatible software - you will use this to record your income and expenses - for example, Xero, Sage or QuickBooks. Again, your accountant should be able to help here, or even offer their own solution.

Lastly, don’t worry. Whilst change can be daunting, and MTD represents a huge shift in the tax compliance system, it is manageable. With some preparation, professional support and understanding, the change could even be beneficial, giving you year-round insights into your earnings and lead to less stress than you had when filing your traditional annual tax return.

In summary, MTD will change how you do your taxes.

You will:

report more frequently to HMRC, sending updates four times a year, as opposed to just one annual filing.

be required to use MTD compliant software to record and report your income and expenses.

However, you won’t pay any more tax than you would have done before MTD, and you won’t pay tax any earlier (or four times a year), nor will you be required to submit the equivalent of four full tax returns a year.