What Should I Do If I Qualify for MTD?

Realising that you now qualify for Making Tax Digital for Income Tax (MTD ITSA) can feel like one more burden added to your already busy life. You may be wondering what this means for your day-to-day record-keeping, how soon you need to act, and whether you’re ready for the change. You don’t have to wait until the last minute or face the change unprepared. HMRC has created a voluntary pilot program that lets you practice the process before it becomes necessary. This is like a safety net: you can test your systems, learn how things work, and fix any mistakes without facing penalties.

Preparing early means less stress, smoother compliance, and potentially even better visibility of your finances. Here’s how you can approach it.

Step 1: Confirm Your Position

Start by checking your qualifying income. HMRC looks at your combined gross income from self-employment and property:

• If it exceeds £50,000, you’ll join MTD from April 2026.
• If it’s between £30,000 and £50,000, you’ll join from April 2027.

If your income falls below these thresholds, you’re outside MTD for now. Confirming where you stand helps you plan your timeline and decide how urgently you should prepare.

Step 2: Get the Basics in Place

Once you know you’re in scope, the next step is straightforward:

• Choose MTD-compatible software that records transactions digitally and can submit quarterly updates.
• Ensure your records of income and expenses are digitised and categorised correctly.
• Retain your original documents like invoices and bank statements, as HMRC still requires these.

If you’re moving from spreadsheets or paper, allow a little time to familiarise yourself with the new system. Your accountant or software provider can also support you with training.

Step 3: The Pilot Programme

This is where things get interesting. HMRC’s MTD pilot programme is a live testing environment designed for taxpayers like you to experience MTD before it becomes mandatory.

What It Is

The pilot lets you sign up voluntarily through compatible software and begin sending digital quarterly updates just as you would under MTD. But the key difference is that you’re doing it before deadlines apply, so there’s no pressure of penalties.

How It Works

• You register through your chosen software, rather than directly with HMRC.
• You’ll start submitting quarterly updates, based on your actual records.
• You’ll complete the process in real time, building confidence and familiarity.

Why It Matters

Joining the pilot gives you hands-on experience. Instead of waiting until April 2026 or 2027 and rushing through the process under time pressure, you get to practice now. That means:

• You’ll catch mistakes early, whether in categorising expenses or capturing income.
• You’ll learn how your software integrates with your business banking and invoicing.
• You’ll identify gaps in your processes and fix them long before deadlines loom.
• You’ll get support access from HMRC and software providers while you learn.

Step 4: Ongoing Readiness

Even if you join the pilot, it pays to keep one eye on the bigger picture. MTD rules are evolving, and HMRC announcements may bring adjustments along the way. Build regular habits now:

• Schedule time each quarter to check, reconcile, and review your records.
• Stay in touch with your accountant about roles, responsibilities, and updates.
• Monitor HMRC communications so you’re not caught off guard by changes.

Conclusion

To qualify for MTD, there doesn’t have to be a stressful scramble. By confirming your position, putting the basics in place, and most importantly, joining the pilot programme, you give yourself the best possible preparation.

Think of the pilot program as practice. It allows you to improve your skills and build confidence without worrying about penalties. When your official start date comes, you will already know the system well. By being proactive now, you can stay compliant and gain clearer insights into your finances.