HMRC have rolled out a pilot scheme for Making Tax Digital for Income Tax (MTD IT) which offers taxpayers an early chance to familiarise themselves with MTD before it's compulsory.
What is the HMRC Pilot Scheme?
- Initially, MTD IT will be rolled out to taxpayers with qualifying sole trade or rental income in a phased approach starting from 2026. 6 April 2026 - Sole trade businesses and landlords with combined qualifying income over £50,000
- 6 April 2027 - Sole trade businesses and landlords with combined qualifying income over £30,000
- 6 April 2028 - Sole trade businesses and landlords with combined qualifying income over £20,000
The UK Government is currently considering options for those who have qualifying income of less than £20,000.
Those impacted will need to:
- keep digital records of all business-related income and expenditure – this can either be by use of compatible software, or spreadsheets to store records;
- submit quarterly updates of their income and expenses per trade no later than one month and seven days following the quarter end; and
- submit a 'final declaration' in place of the usual submission of a Self Assessment Tax Return.
More information on Making Tax Digital can be found here: Making Tax Digital for Income Tax
The pilot scheme allows self-employed individuals and landlords with qualifying income to voluntarily sign up for MTD IT.
Why Join the Pilot Scheme?
- Take advantage of the opportunity to test and experience MTD IT firsthand
- Become familiar with the requirements of MTD IT before it becomes compulsory
- Consider the best options for digital record keeping software to see what works best for you
- There are no penalties during the testing phase for either missing deadlines or sending quarterly updates late
Ensure you are prepared for receiving a letter from HMRC after 31 January 2026, just two months before compulsory reporting
How Hodge Bakshi can help
Hodge Bakshi have a dedicated team in place for Making Tax Digital for Income Tax. We can provide advice on the best software to use to meet your needs and provide expert support throughout the process, helping to ensure that you remain compliant.
Are you eligible?
To find out if you are eligible, or to enquire about taking part in the trial, contact us today
Author
Melanie O'Connor | ATT | CTA
Director
How can we help?
Based in Cardiff, Hodge Bakshi is a leading firm of Chartered Accountants and Chartered Tax Advisers with over 40 years' experience serving businesses and individuals across South Wales and the UK.
Navigating the complexities of switching from the current self-assessment process to Making Tax Digital for Income Tax will be challenging. As Chartered Tax Advisers, our experienced tax specialists are on hand to provide tailored advice and support you through the switch to digital, ensuring you are compliant with the new digitised tax system.