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Agent toolkit — accessible version

Published 6 December 2024

Making Tax Digital (MTD) for Income Tax is a new way to report income from self-employment and property to HMRC. It will be introduced in phases from April 2026.

This toolkit is intended to help you prepare yourself and your clients for MTD for Income Tax. You’re welcome to use this information to help support your clients.

It includes:

• an overview of what is changing, who is affected and how to prepare 
• links to MTD for Income Tax guidance 
• frequently asked questions (FAQs) 
• MTD for Income Tax communication resources for agents and clients

Overview of MTD for Income Tax changes and how to prepare 

What’s happening 

If you have clients who are sole traders or landlords with gross income (before expenses and tax are deducted) from self-employment and property of more than £30,000, they will need to use MTD for Income Tax. 

MTD for Income Tax will require customers, or their tax agent (this could be a bookkeeper or an accountant), to keep digital records and send quarterly updates of their income and expenses to HMRC, using MTD for Income Tax compatible software. Where customers have kept accurate and up-to-date digital records using MTD for Income Tax compatible software, the quarterly updates will be a simple check and send of a report generated by their software. 

At the end of the year, when sole traders and landlords file their tax return most of the information for income from self-employment or property will be ready to submit. Information from quarterly updates will be combined with a customer’s information on personal income HMRC holds elsewhere. Most users will then need to make adjustments to their business income, and check that their income from all sources is recorded, before confirming that the information they’re submitting is correct and complete.

We are introducing a new penalty regime to support MTD for Income Tax from April 2026. A points-based system will be introduced for late filing. Where a customer misses a quarterly or annual submission obligation, they will receive a penalty point. Once the customer reaches the points threshold, they will receive a financial penalty. New late payment penalties are more proportionate, and charged at different rates based on when the outstanding amount is paid.

Who’s affected

Who will legally have to use MTD for Income Tax and when they’ll have to start using the system depends on their MTD for Income Tax qualifying income. This is the gross income (before expenses and tax are deducted) that sole traders and landlords receive in a tax year from self-employment and property. Your clients will need to use MTD for Income Tax:

• from 6 April 2026, if their gross income from these sources totals over £50,000 
• from 6 April 2027, if their gross income from these sources totals over £30,000 

The government has announced that sole traders or landlords with a gross income from self-employment and property over £20,000 will be need to use MTD for Income Tax in the future. We’ll set out the timeline for this at a later date.

HMRC will use your client’s most recent tax return to identify if they will have to use MTD for Income Tax. For example, customers who have to use MTD for Income Tax from 6 April 2026 will be identified based on their 2024 to 2025 tax return (which has to be submitted by 31 January 2026). HMRC will send a letter to each taxpayers identified as needing to use MTD for Income Tax before April 2026, but you and your clients should not wait until then to start your preparations.

The current annual Self Assessment obligations will not change for those who don’t have to join MTD for Income Tax. However, if a landlord or sole trader has income from self-employment or property of less than £30,000, they can still choose to join MTD for Income Tax voluntarily at any time.

How accountants and bookkeepers can get ready 

You should start preparing now as there are a number of steps to complete to make sure you and your clients are ready and confident with the new process ahead of April 2026.

1. Consider what your clients’ qualifying income might be for the tax year 2024 to 25 and 2025 to 26.

2. Find out if and when your clients need to use MTD for Income Tax based on their qualifying income.

3. Get compatible software and speak to your clients about their needs for compatible software.

4. Create an agent services account if you don’t already have one.

5. Sign up your clients for MTD for Income Tax.

6. Sign in to your agent services account to copy across clients if you haven’t done this already.

7. Start using MTD for Income Tax.

By completing the first step of the sign-up process, you can check if your client is eligible to use MTD for Income Tax voluntarily before April 2026. Signing up early will mean you and your clients can get used to the new process before it becomes mandatory. If you don’t sign up early, you and your clients can still start practicing new ways of digital record keeping to make it easier for you to transition to MTD for Income Tax later.

You can find more guidance in the Making Tax Digital for Income Tax step by step or go to GOV.UK and search ‘Making Tax Digital for Income Tax agent step by step’.

How accountants and bookkeepers can get their clients ready

As well as preparing yourself you might want to think about how you can get your clients ready for MTD for Income Tax and prepare yourselves to answer their questions. This will range from signposting them to the latest information to help them understand the change, through to encouraging them to take actions so they’re ready to work in a new way with you. This might include your clients changing how they keep their records, getting and starting to use new software early, or opening a business bank account, but it will depend on their circumstances and how you choose to work.

We’ve produced some helpful resources for you to use with your clients. These can be found at the end of this document.

The purpose of MTD for Income Tax

These changes will help to:

• reduce the chance of customers making errors in their returns, which can take time and money to correct at a later date
• ensure customers have up to date, accurate information to help with business planning and to support business productivity
• move customers’ tax records onto one new HMRC platform supporting wider improvements now, and in the future, so HMRC can deliver a better customer experience
• make sure customers pay the right amount of tax, so that more money can go to funding public services that we all rely on and supporting growth across the UK

Join testing voluntarily

If you sign up for testing of the MTD for Income Tax service now, you’ll build your understanding of and confidence in using the new systems and processes early. Throughout the whole testing period, you and your clients will have access to HMRC’s dedicated MTD Customer Support Team. They will help you and your clients who are in MTD for Income Tax testing with any questions about MTD for Income Tax, and provide support with some of your clients’ other tax affairs.

You can sign clients up in four steps.

1. Read the eligibility criteria and consider which clients you can sign up now. When signing up, you’ll be asked some questions to confirm whether your client is eligible.

2. Speak to your clients before you sign them up for testing to check they’re happy to take part. You should also check if they have or can get record keeping software that is suitable and compatible with MTD for Income Tax. 

3. Ensure that you have MTD for Income Tax compatible software ready to submit returns on behalf of your clients. Before signing up, check the available software options on GOV.UK and contact your chosen provider. They will provide you with guidance about their MTD for Income Tax testing onboarding process.

4. Sign up your clients.

Find more information on how to sign up your client for MTD for Income Tax or go to GOV.UK and search ‘sign up your client for MTD for Income Tax’ to find out more and sign up.

Links to MTD for Income Tax guidance

If you’ve got a paper copy of the toolkit, go to GOV.UK and search for the page title to find the content you’re interested in.

Take part in testing and sign up to Making Tax Digital for Income Tax

Find out more information about signing up and taking part in testing:

• in Making Tax Digital for Income Tax as an agent: step by step
• in Making Tax Digital for Income Tax for individuals: step by step
• in Find out if and when you need to use Making Tax Digital for Income Tax

Software choices

You can find software that works with Making Tax Digital for Income Tax.

Penalty reform

Find out about:

• the penalties for Income Tax Self Assessment volunteers
• the penalties for late submission
• the penalties for late payment

Using Making Tax Digital for Income Tax

Find out how to use Making Tax Digital for Income Tax.

Frequently asked questions (FAQs)

Q1 — As part of MTD for Income Tax, will sole traders and landlords need to complete 4 tax returns a year?

No, MTD for Income Tax will require sole traders and landlords to send quarterly updates of their self-employment and property income and expenses to HMRC. Where customers have kept up to date digital records using MTD for Income Tax compatible software, the quarterly updates will be simple summaries generated by their software. Submission to HMRC will happen with the click of a button and your software will tell you when and how to send updates.

At the end of the year, customers will still need to submit their annual tax return. This will already include information they have submitted during the year in their quarterly updates. They will be able to finalise the self-employment and property income sources by making any tax or accounting adjustments in their software. Customers will need to check and confirm the information in their return is correct before they submit it.

Q2 — Will sole traders and landlords be required to make quarterly payments?

The government is not changing how payments of tax are collected.

HMRC already offers a range of different ways that customers can pay the tax they owe, including payments on account or by setting up weekly or monthly payments through a Budget Payment Plan. The introduction of Making Tax Digital for Income Tax will not change this and a customer’s Income Tax liability will continue to be assessed after the end of the tax year, when they submit their tax return using MTD compatible software. However, estimates of their Income Tax liability will be available during the tax year, for those customers who find them helpful for financial planning.

Q3 — Will sole traders and landlords need to keep extra records, and will this be expensive?

Additional records are not necessarily needed compared to traditional Self Assessment, but these records do now need to be kept digitally, using MTD for Income Tax compatible software. The records provided to HMRC will be summaries, not a breakdown of individual transactions.

HMRC is working with the software community to ensure software is available at a range of price points. This will include free software for those with the simplest circumstances.

Q4 — What is MTD for Income Tax compatible software?

MTD for Income Tax compatible software is provided by an organisation outside of HMRC that works with MTD for Income Tax systems, so that agents and customers can use it to submit quarterly updates to HMRC. You need to use an MTD for Income Tax compatible software product or products that collectively will enable you to:

• create and store digital records of your business income and expenses
• send quarterly updates
• submit your tax return by 31 January after the end of the year
• receive information back from HMRC

Q5 — Can sole traders or landlords with income from self-employment and property below £30,000 use MTD for Income Tax?

Sole traders and landlords with a total income from self-employment and property of more than £20,000 will be required to use MTD for Income Tax from a later start date. This will be confirmed by the government at a future fiscal event.

Sole traders and landlords with qualifying income below £20,000 will be able to sign up voluntarily so they can benefit from the changes.

Q6 — How will MTD for Income Tax reduce error?

Regularly updating records and making full use of software features, including helpful nudges and prompts, will reduce the chance of errors, meaning less time is spent trying to put things right. It will also ensure customers have up to date, accurate information to help with business planning.

MTD for VAT has already helped, with 48% of businesses saying it has made them feel more in control of their finances.

Q7 — Will I get a financial penalty if I miss a quarterly update deadline?

There are no late submission penalties for late quarterly updates during the voluntary testing phase of MTD for Income Tax.

When MTD for Income Tax becomes mandatory from April 2026, one penalty point will apply for each missed submission deadline. A financial penalty will only be charged once the points threshold of 4 points is reached.

Q8 — Do agents have to have a client’s permission to sign them up to test the service before April 2026?

Yes, agents must get their client’s permission before signing them up for testing. Agents need to tell their client:

• what they’re signing the client up to
• what it means for the client
• that HMRC’s new penalties will apply to the client if they miss deadlines for submitting their tax return or paying their bill

Q9 — What about customers who can’t engage digitally?

HMRC will tell customers how to apply for an exemption from MTD for Income Tax at a later date when the application process opens.

This could be because:

• of disability, their location or their age
• their religious beliefs are incompatible with using software to keep digital records

MTD for Income Tax communication resources for agents and clients

This section contains:

• an agent checklist that you can print off and use
• relevant YouTube videos
• a link to posters you can print off and use in your offices

Agent checklist: Get ready for Making Tax Digital for Income Tax

If you have clients who are sole traders or landlords with gross income from self-employment and property that is more than £30,000, they will need to use Making Tax Digital (MTD) for Income Tax. This means they will have to keep digital records and send quarterly updates to HMRC using compatible software. They will also be subject to the new penalties.

When your clients will legally have to start using MTD for Income Tax depends on their MTD for Income Tax qualifying income. This is the gross income (before expenses and tax are deducted) that customers receive in a tax year from self-employment and property. Your clients will need to use MTD for Income Tax:

• from 6 April 2026, if their gross income from these sources totals over £50,000
• from 6 April 2027, if their gross income from these sources totals over £30,000

You should start preparing now as there are a number of steps to complete to make sure you and your clients are ready and confident with the new process ahead of April 2026.

Use this checklist to understand what you need to do.

1. Consider what your clients’ qualifying income might be for the tax year 2024 to 25 and 2025 to 26.

2. Find out if and when your clients need to use MTD for Income Tax based on their qualifying income. 

3. Get compatible software and speak to your clients about their needs for compatible software.

4. Create an agent services account if you don’t already have one. 

5. Sign up your clients for MTD for Income Tax. 

6. Sign in to your agent services account to copy across clients, if you haven’t done this already. 

7. Starting using MTD for Income Tax.

By completing the first step of the sign-up process you can check if your client is eligible to use MTD for Income Tax voluntarily before April 2026. Signing up early will mean you and your clients can get used to the new process before it becomes mandatory. If you don’t sign up early, you and your clients can still start practicing new ways of digital record keeping to make it easier for you to transition to MTD later.

You can find more guidance in the Making Tax Digital for Income Tax step by step or go to GOV.UK and search ‘Making Tax Digital for Income Tax agent step by step’.

Videos

Watch a video on Making Tax Digital: The future of tax.

Craig Ogilvie on Making Tax Digital: The future of Tax

You will learn about how Making Tax Digital will:

• play a role in reducing errors and modernising infrastructure
• simplify taxes
• addresses the tax gap

Watch a video about Making Tax Digital for Income Tax for agents.

Agents — Making Tax Digital for Income Tax

Watch a video about Making Tax Digital for Income Tax for customers.

Customers — Making Tax Digital for Income Tax

Posters

There are two posters for MTD for Income Tax in the PDF version of this toolkit, which you can print off and use in your offices.