MTD for Income Tax 2026 for Small Businesses?

Team Nomi

Sep 09, 2025
3 minutes read

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Change is coming for small business owners and landlords. From 6 April 2026, MTD for Income Tax, also known as MTD ITSA, will replace the traditional annual Self Assessment for many taxpayers.

This change is part of HMRC’s plan to make the UK tax system digital, accurate and efficient. But what does it mean in practice? Let’s take a look.

What Is MTD for Income Tax?

MTD for Income Tax (Making Tax Digital for Income Tax Self Assessment) is HMRC’s new requirement to keep digital records and send quarterly updates, instead of filing a single yearly return.

From 6 April 2026, the rules will apply to:

• • Self-employed individuals
  • Landlords
  • Partnerships (at a later stage)

You’ll need to comply if your  qualifying income (gross) from self-employment and property is over £50,000. From 6 April 2027, the threshold drops to £30,000.

How Will It Change the Way You File Tax?

Under the current Self Assessment system, you need to submit one return a year. With MTD ITSA, you’ll need to:

1. 1. Keep digital records of income and expenses.
   2. Submit quarterly updates to HMRC.
   3. File an End of Period Statement (EOPS) and a Final Declaration to confirm your total annual income and tax owed.

This means you’ll be interacting with HMRC more often. But you’ll also then have a clearer picture of your finances throughout the year.

Why the Change?

HMRC’s aim is to:

• • Reduce errors caused by manual record-keeping.
  • Give you a more accurate, up-to-date view of your tax liabilities.
  • Improve financial planning by spreading tax admin across the year.

For small business owners, it’s a great opportunity to get more organised and avoid the usual January tax rush.

What Do You Need to Prepare?

1. Choose MTD-Compatible Software

You’ll need software that links directly to HMRC’s systems for MTD Income Tax. This will help ensure your quarterly updates are submitted in the right format.

2. Keep Digital Records

Paper receipts and manual spreadsheets are no longer enough. Store all your income and expense records digitally.

3. Plan for Quarterly Reporting

Quarterly updates mean you’ll need a more consistent approach to bookkeeping. Regularly managing your accounts will make each submission easier.

Benefits of Going Digital

While the switch to digital Self-Assessment may feel a little daunting, it comes with its benefits:

• • Better financial visibility: See your profit and tax in real time.
    
  • Less last-minute stress: Smaller, more frequent submissions spread the workload.
    
  • Fewer mistakes: Automation reduces the risk of errors… and HMRC penalties.

Get Ready for the 2026 Income Tax Changes

The introduction of MTD for Income Tax in April 2026 (from 6 April) is a big change for small business owners. By choosing the right software and starting good digital record-keeping habits early on, you can make the transition smoothly (and even improve the way you manage your business finances).

Want to make MTD compliance simple? Nomi’s MTD-ready software helps small business owners track income, file quarterly updates and stay ahead of the 2026 Income Tax changes.

Book your free demo today.