When Will I Need to Submit Digital Tax Returns

The UK tax system is going digital, and many individuals and businesses will soon need to submit their tax returns online using approved software. This change is part of HMRC’s Making Tax Digital (MTD) initiative, which aims to simplify tax reporting, reduce errors, and provide real-time visibility of your tax position. If you are self employed, a landlord, or run a business, it is important to know when digital tax returns will become mandatory for you. This article explains the deadlines for Making Tax Digital, who is affected, and how to prepare for the switch to digital submissions.

What Is Making Tax Digital

Making Tax Digital is HMRC’s long-term plan to modernise the UK tax system by requiring taxpayers to:

  • Keep digital records of income and expenses.

  • Submit tax information electronically through HMRC-approved software.

  • Send quarterly updates instead of one annual return.

The goal is to make tax reporting more accurate and efficient, reducing the number of mistakes that lead to overpayments or underpayments.

Current MTD Rules for VAT

Making Tax Digital first applied to VAT. Since April 2022, all VAT-registered businesses must:

  • Keep digital records of their VAT transactions.

  • Submit VAT returns using MTD-compatible software.

Even small businesses with turnover below the £90,000 VAT threshold must comply if they are registered for VAT. The old HMRC VAT portal can no longer be used for VAT submissions, except in limited cases where an exemption has been granted.

Making Tax Digital for Income Tax

The next major phase is Making Tax Digital for Income Tax Self Assessment (MTD for ITSA). This will affect self employed individuals and landlords who currently file Self Assessment tax returns each year.

Under the new system, you will need to:

  • Keep your income and expenses digitally.

  • Send quarterly updates to HMRC using MTD software.

  • Submit an end-of-period statement and a final declaration after the tax year ends.

The rollout for MTD for Income Tax is scheduled in two stages:

  1. From April 2026, self employed individuals and landlords with a total income above £50,000 must join MTD.

  2. From April 2027, those with a total income between £30,000 and £50,000 will also be required to comply.

HMRC has not yet confirmed a date for those earning below £30,000, but this group may be included in later phases.

What About Partnerships and Companies

General partnerships will join Making Tax Digital for Income Tax at a later date, though HMRC has not yet announced when this will happen.

Limited liability partnerships (LLPs) and companies will eventually be brought into the MTD system as well, through a future stage known as Making Tax Digital for Corporation Tax. HMRC has indicated that pilot testing for this could begin later in the decade, but no firm start date has been set.

For now, MTD applies mainly to VAT and will soon extend to self employed individuals and landlords under Self Assessment.

What Will Change Under MTD for Income Tax

Under the current Self Assessment system, most people submit one tax return each year. Under MTD, this process becomes more frequent and digital.

The key changes include:

  • Quarterly updates: You must send HMRC an update every three months showing your income and expenses for that period.

  • End-of-period statement (EOPS): After the end of the tax year, you confirm your annual totals and make adjustments such as capital allowances.

  • Final declaration: Once all income sources are finalised, you submit a declaration confirming the total tax owed.

Although there will be more frequent submissions, many taxpayers will benefit from seeing a clearer picture of their tax position throughout the year.

What Software You Will Need

To comply with Making Tax Digital, you must use MTD-compatible software. This software connects directly to HMRC’s systems and allows you to:

  • Record income and expenses digitally.

  • Create and send quarterly updates.

  • Submit final declarations automatically.

Popular options include QuickBooks, Xero, FreeAgent, and Sage. You can also use bridging software if you prefer to keep records in spreadsheets, as long as the program links digitally to HMRC’s API.

If you currently record income manually or with paper files, you will need to move to a digital system before your MTD start date.

How to Prepare for Digital Tax Returns

If you are self employed or a landlord, preparation is key to a smooth transition to MTD. You can start by:

  • Reviewing your record keeping methods and switching to digital accounting software.

  • Ensuring your software is MTD-approved and can integrate with HMRC.

  • Keeping business and personal finances separate for clearer reporting.

  • Speaking to your accountant about setting up quarterly reporting.

  • Staying informed of HMRC updates regarding your start date.

Starting early allows you to get comfortable with the software before digital submissions become compulsory.

Exemptions from Making Tax Digital

Some people may be exempt from MTD if they can prove it is not reasonably practical for them to comply. Exemptions may apply for reasons such as:

  • Age or disability that prevents use of digital tools.

  • Religious beliefs that prohibit the use of electronic devices.

  • Location with no reliable internet access.

To apply for an exemption, you must contact HMRC directly and provide supporting evidence. If approved, you may be allowed to continue filing paper returns.

Benefits of Digital Tax Returns

Although MTD introduces new requirements, there are several benefits to switching to digital tax reporting:

  • Improved accuracy and fewer calculation errors.

  • Real-time visibility of your tax position throughout the year.

  • Easier organisation of financial records.

  • Reduced risk of missed deadlines or underpaid tax.

  • Streamlined communication between you, your accountant, and HMRC.

By using software to manage records, you also save time and reduce paperwork, making it easier to focus on running your business.

How Accountants Help with MTD

An accountant can help you prepare for Making Tax Digital by:

  • Choosing and setting up the right accounting software.

  • Migrating your existing records into a digital format.

  • Managing quarterly submissions and end-of-year statements.

  • Ensuring you remain compliant with HMRC’s requirements.

  • Providing ongoing tax advice to help you plan ahead.

With professional support, you can make the transition to digital tax returns with confidence and avoid common mistakes that might trigger penalties.

Summary

You will need to start submitting digital tax returns once Making Tax Digital applies to your income type and level. VAT-registered businesses are already required to comply, while self employed individuals and landlords earning over £50,000 must join from April 2026. Those earning between £30,000 and £50,000 will follow from April 2027.

Preparing early by adopting digital software and speaking with your accountant ensures you are ready when your start date arrives. Making Tax Digital represents a major step towards modernising the tax system, providing greater accuracy, transparency, and convenience for both taxpayers and HMRC.