Answering your MTD for Income Tax FAQs  

What is MTD for Income Tax?

As HMRC explain in their own words, Making Tax Digital for Income Tax requires businesses and landlords with qualifying income to maintain digital records and update HMRC each quarter using compatible software.

As an accountant, this means you need to prepare for the change to best support your clients for whom this applies to as this means sole traders and landlords might be required to: 

• Keep their records digitally.
• Provide digital quarterly updates.
• Be able to provide their Income Tax return information to HMRC through compatible software.  

What is MTD for VAT? 

MTD for VAT was HMRC’s first phase of MTD, which involved requiring all VAT-registered businesses to keep digital records and submit VAT returns electronically. It was implemented from April 2019. 

Who does MTD for Income Tax apply to and what are the income thresholds? 

Your clients will need to use MTD for Income Tax if they are sole traders and landlords, and:

• from 6 April 2026, their total gross income from their self-employment and/or property exceeds £50,000 in 2024-25.
• from 6 April 2027, their total gross income from their self-employment and/or property exceeds £30,000 in 2025-26.
• from 6 April 2028, their total gross income from their self-employment and/or property exceeds £20,000 in 2026-27. 

Who is exempt from MTD for Income Tax?

There are some exemptions from MTD, including:

• Trusts.
• Estates.
• Trustees including trustees of registered pension schemes.
• Non-resident companies.
• Some complex partnerships.
• Digital exclusions, such as for people where it’s not practical for them to use digital tools for electronic record keeping or communications due to age, disability, religion, or any other reason.
• Those subject to an insolvency procedure.
• Those with no National Insurance Number.
• Foster carers.
• Foreign businesses of non-UK domiciled individuals.

How will the taxpayer learn about MTD and become aware of it?

HMRC have said that from April 2025, they’ll be writing to customers whose 2023 to 2024 Self Assessment tax return showed that their income from these sources was close to, or over, £50,000.  

This letter will alert them to using MTD, but as an accountant, it’s the perfect opportunity to get ahead and guide them in this change by proactively reaching out and making suggestions about what might be right for them—whether this is joining the 2025 beta or waiting until 2026.

Does Gross Income (£50k) mean turnover or actual net profit?

The threshold applies to the individual taxpayer’s gross income before expenses, derived from all relevant sole trade businesses and properties. For example, within a financial year, if a client receives £35,000 income from their sole trade business and £30,000 from rental income as a landlord, they will be mandated for MTD for Income Tax regardless of how that income is split.

In quarterly reporting, what is the deadline for each quarter?

For the Public BETA (pilot) the deadlines are as follows:

• Quarter 1, 5th August following the end of Quarter 1
• Quarter 2, 5th November following the end of Quarter 2
• Quarter 3, 5th February following the end of Quarter 3
• Quarter 4, 5th May following the end of Quarter 4

From 6th April 2026 the deadlines change to:

• Quarter 1, 7th August following the end of Quarter 1
• Quarter 2, 7th November following the end of Quarter 2
• Quarter 3, 7th February following the end of Quarter 3
• Quarter 4, 7th May following the end of Quarter 4

Will I be submitting a ‘mini tax return’ each quarter with the quarterly updated? 

No, in the quarterly submissions you only need to include information that relates to your client's self-employment and/or property income and expenses, this will be equivalent to the SA103 and SA105 pages. Therefore, the quarterly submissions won’t be as detailed as the current annual Self-Assessment tax return.  

Lastly, you won’t need to make any accounting or tax adjustments quarterly, unless you choose to. As quarterly submissions are cumulative, any mistakes you identify in the previous quarter can be corrected in the following quarter. Please note the underlying digital records will need to be corrected also.

What is the process for MTD for Income Tax?

You can view the MTD for Income Tax process for accountants below:

What do I need to do to get ready for MTD as an accountant?

The steps you must take to get yourself MTD compliant are:

1. Work out your client’s qualifying income.
2. Find out if and when your client needs to use this service.
3. Get compatible software.
4. Create an agent services account.
5. Sign up your client for Making Tax Digital for Income Tax.
6.  Sign in to your agent services account.
7. Use the Making Tax Digital for Income Tax service.

How do I get test user credentials?

There are no test user credentials for HMRC MTD sandbox environment. The sandbox is a development environment only. Currently it is only possible to test MTD for Income Tax with actual taxpayers by submitting to HMRC’s live environment.

Do I have to authorise each client individually even if they are an existing client on our gateway?

Yes. Each client needs to authorise you to act on their behalf for MTD for Income Tax. 

The link for this authorisation can either be generated from your Agent Services Account (ASA) or from within our CCH iFirm MTD for Income Tax software. The link is supplied to the client who follows the link to the HMRC website, signs in and grants authorisation for you to act on their behalf. This is a one-time event.

Even where a 64-8 is in place this new authorisation process will still need to be used for MTD for Income Tax. Where you (the agent) create an Agents Services Account (ASA), that links to your existing HMRC Agent Online Services account(s)—and transfer the existing client authorisations to the new ASA—then the transfer of authorisations results in you being authorised to act on the clients behalf for MTD for Income Tax, without any additional work required on your part.

Where you take on a new client (or don't transfer the authorisation across from your HMRC Agent Online Services account to your ASA) then the new authorisation process will need to be used for MTD for Income Tax.

As an accountant, how do I sign my clients up for MTD for Income Tax?

According to HMRC, you can sign up your clients as of now.

If any of your clients are affected by this change (see above), they’ll need to be signed up by‌‌‌ April‌‌‌ 2026. You may also be able to sign up your clients now, before Making Tax Digital for Income Tax becomes mandatory, by visiting 'Sign up your client for Making Tax Digital for Income Tax'.

From‌‌‌ April‌‌‌ 2025, you’ll see two options:

• Option 1: sign up now for the‌‌‌ 2025‌‌‌ to‌‌‌ 2026‌‌‌ tax year to prepare your business and clients and to familiarise yourself with the changes.   
  This is recommended by HMRC to test the service during its beta (pilot) phase, as clients that sign up now will have exclusive access to HMRC’s Making Tax Digital Customer Support Team. They can support you and help with some of your clients’ other income tax queries.
• Option 2: sign up for the‌‌‌ 2026‌‌‌ to‌‌‌ 2027‌‌‌ tax year. 
  You should discuss the options with your clients and agree which one to choose.

Do we know how complex the client giving us authorisation is. Is it similar to TRS or the CGT system?

The process will be straightforward. The link for this authorisation can either be generated from your Agent Services Account (ASA) or from within our MTD for Income Tax software.  

The link is supplied to the client who follows the link to the HMRC website, signs in and grants authorisation for you to act on their behalf. This is a one-time event. Please refer to the next question, where your HMRC Online Service account already records your authorisation to act of the taxpayer's behalf for Self Assessment.

What happens if the taxpayer is already making quarterly submissions in MTD for Income Tax and starts a new self-employment in Q1?

If the Self-employment or property income relates to a new source of income which started in the year, the figure reported will need to be adjusted in order to compare 12 months’ worth of income against the MTD mandation threshold.  

If the taxpayer starts a new business in May 2026. The first tax year that will include the income from this business will be 2026-2027, which would need to be finalised by 31 January 2028. They would then need to make quarterly submissions for this business from 6 April 2028.

For instance, if you became self-employed on 1 May 2025 and earn gross income of £10,000 per month, your 2024/25 tax return will show £30,000 of income, which is below the MTD mandation threshold for April 2026. But that amount will need to be adjusted to estimate a full year’s worth of income – ie £120,000. You will therefore need to comply with MTD from April 2026 as your qualifying income exceeds £50,000 when adjusted pro-rata for a full year.

The MTD regulations do provide for an alternative approach of applying an alternative method if annualising ‘would work unreasonably or unjustly’. This may be helpful for seasonal trades, where income is not expected to be even throughout the year, though HMRC have not yet confirmed their position. 

More information can be found using this link.

What happens when we do the global roll forward of tax returns and its changing from SA100 to the new MTD one?

Currently it is only possible to create a tax year for an individual taxpayer from CCH Personal Tax. We will look at bulk creating the tax year for multiple taxpayers later this year.

Can non-resident landlords without a National Insurance Number join the Public BETA?

The taxpayer needs to have a National Insurance number on the 31st January before of the start of the tax year that they could join MTD For Income Tax, or else they are exempt.

Your CCH software-specific MTD FAQs 

We’ve had many questions around our MTD for Income Tax solution, and how CCH software can help you in the change, generally.  

Below, our product experts answer your most frequent queries around CCH iFirm MTD for Income Tax, our cloud solution. You can sign up to our beta, here.

Do you expect to have CCH iFirm MTD for Income Tax software to be ready for the pilot? i.e., will it be able to import data from software come April?

CCH iFirm MTD for Income Tax will be ready to support customers interested in taking part in the MTD pilot. The first release of our MTD for Income Tax product will be able to import data from a spreadsheet upload, we will support the import of data via bookkeeping integrations by Q3 2025 at the latest.

Where can I watch a demonstration of CCH iFirm MTD for Income Tax? 

We have a series of dedicated webinars aimed at helping you understand the intricacies of MTD, including demos of CCH iFirm MTD for Income Tax. See the Wolters Kluwer MTD for Income Tax Webinar Series, to register for upcoming episodes.

Will quarterly data imports from bookkeeping software into CCH be possible?

This functionality is not available currently. We are exploring options for integrating the data from book-keeping software into CCH iFirm MTD for Income Tax with the view of having something available in the second half of 2025. The first release will focus on integrations with Xero, QuickBooks, Sage and FreeAgent, thereafter we will be releasing integrations on an on-demand based on feedback from customers.

If the quarterly reports are submitted from a different software, do we get info from the other software or direct from HMRC for us to make the after-year adjustments?

Where the quarterly submissions are made in different software (i.e. software other than CCH iFirm MTD for Income Tax) then we will include functionality in a future release to retrieve the data submitted and display within CCH iFirm MTD for Income Tax, along with the status of the Obligations for each of the quarters.

Are you going to deliver a solution for taxpayers with non-aligned accounting periods?

This is on our road map to deliver in the future. It won’t be available as part of the Public BETA, and we need to work out how this could work in our software.

Are there reports that I can run in CCH to find out which clients will be captured by MTD?

We will be providing a way of identifying taxpayers whose gross income exceeds the threshold for MTD for Income Tax in Q2.

Please note that it is only if the taxpayer's income is over the threshold for 2024/25 that they would be mandated to be within MTD For Income Tax from 6th April 2026.

Will the OneClick function still be relevant / applicable?

MTD for Income Tax will only be available as part of our CCH iFirm cloud suite. We are looking to migrate MTD for VAT from OneClick to CCH iFirm.

Is there the option to just type the numbers in as opposed to an import?

Manually retyping data or copying and pasting is not allowed under MTD. One of the MTD requirements is the use of digital links.  

This means that from the point where business records are created in software (this includes spreadsheets), all transfers of data will have to be made digitally up to the point the data is submitted as part of the quarterly submission.

Is there a report that can be run to identify clients caught by MTD from April 2026 based on 2024 returns?

Yes, we have MTD for Income Tax reports in CCH Reporting to help you identify mandated clients for April 2026 and April 2027. If you don’t have these reports on your system, you can download the reports from the Support Portal and import them into CCH Reporting.

I don't understand how you use web-based software as opposed to CCH. How do they interact with each other and how do I access CCH iFirm?

In the same way that you currently open a Tax Return in CCH Personal Tax you will be able to select the hyperlink for a tax year created in CCH iFirm MTD for Income Tax and you will be taken directly to that tax year.

Where can we find the excel template for bridging the income and expense information for a given business into CCH iFirm MTD for Income Tax?

The drop down for selecting the spreadsheet to upload includes the option to download a template for that business type (sole trade or UK property).

Can CCH iFirm MTD for Income Tax be used as bridging software?

Yes, initially CCH iFirm MTD for Income Tax will bridge data in from spreadsheets for the quarterly submissions. Later in the year we’ll extend this functionality to bridge in data from third-party bookkeeping software, where the preference is to make the quarterly submission within CCH iFirm MTD for Income Tax. 

Will foreign property be able to be reported on the quarterly submissions?

Yes, we will add that functionality in an upcoming quarter.

Will there be a Return Review function which will compare data between CCH Central and CCH iFirm for the first year? 

Currently this functionality is not present in CCH iFirm MTD for Income Tax.

If a supporting agent submits does the quarterly submissions will the information show on our side?

Where the taxpayer or a supporting agent makes the quarterly submissions then we will include functionality in a future release to retrieve the data submitted and display within CCH iFirm MTD for Income Tax, along with the status of the Obligations for each of the quarters.

Is there a preview of the final declaration?

At Wolters Kluwer, we plan to work on this functionality in the latter half of 2025.  

The current expectation is that we would produce a bundle including the tax calculation generated from data submitted to HMRC, along with backing schedules supporting the data included in the calculation.  

The calculation would have a unique calculation ID generated by HMRC which uniquely identifies the calculation (in the same way that the IRmark is used to uniquely identify the version of the Self Assessment Tax Return approved by the taxpayer).

If there are no penalties why not just submit Q1, 2 and 3 in Q4?

If a taxpayer is in MTD for Income Tax voluntarily (i.e. they are in the Private or Public BETA or under the threshold for MTD for Income Tax) then there are no penalties for late quarterly submissions.  

So, in the pilot phase it would be possible to start with a quarterly submission other than Q1 without incurring any penalties.  

Please remember that if the Final Declaration is made after the 31st January deadline, then there will be a penalty for late submission even where the taxpayer is in MTD for Income Tax voluntarily.