Making Tax Digital for Income Tax (MTD) is changing how Self Assessment works in the UK. If you’re an actor, musician, freelancer, or landlord, this is likely to affect you over the next few years. The good news? With the right setup, it doesn’t have to be complicated.
Key takeaways
- Self Assessment is moving from one annual return to quarterly digital updates
- MTD starts from April 2026 for those earning over £50,000 (from self-employment or property)
- You’ll need to use compatible software (like Xero)
- You’ll still submit a final declaration each year
- The right setup makes this smoother and far less stressful
Why is Self Assessment changing?
MTD is part of HMRC’s move to bring the tax system into the digital world.
The aim is to:
- Reduce errors
- Improve accuracy
- Make tax reporting more up to date
- Fit better with how people already run their finances
Who does this apply to?
MTD for Income Tax applies to individuals, not companies. This includes sole traders (e.g. Actors, performers, and freelancers) and landlords.
It’s based on your combined income from self-employment and/or property and comes into effect based in the following levels of income/dates:
- From April 2026: combined income over £50,000
- From April 2027: combined income over £30,000
- From April 2028: combined income over £20,000
If you’re below these thresholds, you’ll continue with the current system (for now).
How does Self Assessment work currently?
Right now you must:
- Keep records during the year
- Submit one tax return
- Deadline: 31 January
How MTD changes Self Assessment
Under MTD, the following key changes will take place:
- Keep digital records throughout the year
- Send quarterly updates
- Submit a final declaration by 31 January
The quarterly updates must be filed within one month and 7 days of the end of each calendar quarter.
What software do you need?
To comply with MTD, you’ll need software that connects directly to HMRC. This is where we strongly recommend Xero.
Why Xero works so well:
- Automatically pulls in your bank transactions
- Lets you snap receipts on your phone
- Keeps everything organised in one place
- Submits updates directly to HMRC
And importantly, it’s built for people who don’t love spreadsheets.
Where we come in
Software is only half the story. We work alongside Xero to:
- Get everything set up properly
- Keep your records clean and accurate
- Ensure you claim all the expenses you can
- Submit updates on your behalf (if you’d like us to)
- Help you understand what the numbers actually mean
Are there any benefits to MTD?
Absolutely, it’s easy to focus on the extra reporting but there are upsides too.
Better visibility
You’ll have a clearer picture of your income and tax position throughout the year.
Fewer surprises
No more January shocks (or at least, fewer of them).
More control
You can plan ahead, rather than reacting at the last minute.
Less admin (when done properly)
With the right processes and the right software, you’ll spend less time on paperwork.
What should you do now?
You don’t need to panic but you do need to prepare, even if MTD doesn’t apply to you yet. Getting set up digitally now will make things much easier later. It gives you better visibility straight away and removes the stress of switching at the last minute
We’ll talk it through in plain English and help you build a setup that works for your world, using Xero and backed by real humans at Raedan.
