Step 1: Complete your 2024/25 tax return

HMRC has sent MTD letters based on your 2023/24 tax return, but the actual requirement to join MTD will be based on your 2024/25 income.

To determine if you fall within the MTD threshold:

Phase 1 (from 6 April 2026):
You’ll need to comply if your combined gross income from self-employment and property exceeds £50,000. This excludes income from employment, dividends, pensions, or partnerships.

Phase 2 (from 6 April 2027):
The threshold drops to £30,000, so if your income is between £30k–£50k, you have an extra year to prepare.

How to check

Add up the relevant boxes on your 2024/25 tax return. If needed, annualise the figures. If your total qualifying income exceeds the threshold, you’ll need to comply with MTD. It is important to note that once you’re in MTD, you stay in for three tax years, even if your income drops below the threshold.

Step 2: Open a separate business bank account if you don’t have one already

MTD requires quarterly digital submissions for each of the following:

Self-employment income (each trade separately)

UK property income and overseas property income

To make this easier, we recommend setting up a dedicated business account. Keeping your business and personal finances separate will simplify bookkeeping and reduce stress when it’s time to submit.

Step 3: Go digital now and get comfortable with the process early

You don’t need to wait. You can start to use MTD-compatible software now for the current tax year which will help you to familiarise yourself with the platform. You will also find it helps you to streamline your invoicing and expense tracking and helps to build confidence before MTD becomes mandatory, avoiding a last-minute rush or panic. You may be surprised at how much information and how helpful the software can be for your business and tracking cashflow.

Quarterly submissions are not full tax returns, they are summaries of your digital records and don’t impact your tax payments due. You don’t need to be a tax expert to categorise income and expenses. Plus, each quarter is cumulative, so you can correct earlier figures in later submissions.

Are there any exemptions?

Yes. MTD does not apply to:

Trusts and estates

Non-UK resident entertainers and sportspeople

Trustees of registered pension schemes

To help you get to grips with the changes we will be hosting free webinars for Landlords and Sole Traders. These will cover everything you need to know, with practical tips and a live Q&A session. Keep an eye on our events page for the booking details to go live. You can also sign up to our newsletter to stay up to date with our latest insights, including up coming events.

If you’re unsure whether MTD applies to you or if you would like help getting started with digital software, reach out to your client care team at Kreston Reeves or get in touch. We are here to support you every step of the way.