Preparing for Making Tax Digital: What AIA Members Need to Know

Preparing for Making Tax Digital: What AIA Members Need to Know

With major changes to the UK’s tax system on the horizon, AIA members should take steps now to ensure their clients are ready for Making Tax Digital (MTD) for Income Tax Self-Assessment (ITSA). HMRC has confirmed that from 6 April 2026, sole traders and landlords with total income exceeding £50,000 will need to comply with MTD requirements - transforming how they report their income and expenses.

Who Needs to Prepare for MTD for ITSA?

From April 2026, self-employed individuals and landlords earning over £50,000 annually will be required to:

✅ Maintain digital records of their income and expenses
✅ Use MTD-compatible software to submit updates to HMRC quarterly
✅ File an end-of-year final declaration instead of a traditional Self-Assessment return

Those earning between £30,000 and £50,000 will be required to join MTD for ITSA from April 2027. There is no confirmed timeline yet for businesses earning under £30,000, and general partnerships are also not yet included in the mandate.

How Will HMRC Inform Affected Taxpayers?

To help with the transition, HMRC will begin contacting relevant taxpayers from April 2025. If a client’s 2023–2024 Self-Assessment tax return shows an income close to or above £50,000, they will receive a letter informing them of the upcoming requirement to comply with MTD for ITSA.

Steps for AIA Members to Take Now

1. Identify Affected Clients

Review your client list and identify any sole traders or landlords earning over £50,000 annually. Inform them about the MTD changes and the need to transition to MTD-compatible software.

2. Encourage Early Sign-Ups

From April 2025, agents will have two sign-up options for clients:

• Option 1: Sign up for MTD for ITSA early (2025-26 tax year) to prepare in advance. Early adopters will receive exclusive access to HMRC’s Making Tax Digital Customer Support Team for additional guidance.
• Option 2: Wait and sign up for the mandatory deadline of April 2026.

AIA members should discuss both options with clients and consider whether early adoption could help smooth the transition.

3. Ensure Clients Are Using MTD-Compatible Software

Clients will need to use approved digital record-keeping software to comply with MTD. Encourage them to start using an MTD-compatible system now, so they can get accustomed to the new process before the 2026 deadline.

4. Stay Updated on MTD Developments

HMRC will continue to release further details and guidance on MTD exemptions, software options, and support services. AIA members should regularly check GOV.UK for updates.

Next Steps for AIA Members

The move to MTD for ITSA is a significant change, but with early preparation, AIA members can ensure their clients transition smoothly. Begin discussions now, review available software solutions, and encourage clients to adopt digital record-keeping practices well before the deadline.

For further guidance, visit Making Tax Digital for Income Tax for agents or contact HMRC’s support services.