Received a letter from HMRC about Making Tax Digital?
Have you received a letter from HMRC which says you may need to change the way you report your income and expenses? If so, this is because HMRC think you may be required to follow their new Making Tax Digital for Income Tax rules from April 2026. This could mean a big change in the way you manage your accounting records and you will need to begin to prepare for this soon. Here we tell you what the letter means and what to do next.
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What is Making Tax Digital (MTD) for income tax?
MTD for income tax is HMRC’s new system for reporting details of business and property income and expenses and for keeping day-to-day records of transactions for accounting purposes. It might also change the way you file your tax return under self assessment.
To find out exactly what the new rules are, see the digital requirements section of our MTD guidance.
You have to follow the MTD rules if you are self-employed and/or you receive rental income and your total gross income from both sources is above the MTD threshold, unless you are exempt. See your start date section of our guidance for more information on the MTD thresholds and the associated dates when you are legally required to follow the new rules. We also explain how to calculate gross income in our guidance.
You can also read about the rules relating to exemption from MTD. You cannot currently apply for exemption but you should be able to do so in 5-6 months time.
Why have I received a letter?
HMRC have reviewed what they know about your current tax position and have written to you to tell you about MTD because they think it is likely you will be required to meet the new digital requirements from April 2026.
It is not certain that MTD will apply to you from April 2026 yet- this depends on what your gross income is on your tax return for the 2024/25 tax year (covering the period 6 April 2024 to 5 April 2025) which must be submitted to HMRC by 31 January 2026. See your start date section of our guidance for more information.
What do I need to do now?
If you know now that your gross income on your 2024/25 tax return will be more than £50,000 and you do not meet any of the exemption rules, then you should read the getting prepared section of our guidance for details of what you need to do to get ready for MTD from April 2026. We also explain what to do if you want to sign up to MTD early so you can test your software - and help HMRC test theirs!
If you are not sure what your gross income will be for the 2024/25 tax year, you should complete your 2024/25 tax return as soon as you can. You will then be able to identify your gross income figure and so give yourself as much time as possible to get prepared for MTD in April 2026 if it is more than £50,000.
If your gross income figure on your 2024/25 tax return is less than £50,000 you will not need to follow the MTD rules until April 2027 at the earliest. You can check your likely position in Your start date section.
