What consultants need to know about Making Tax Digital for income tax

The professional services sector has seen a boom in self-employed and independent professionals in recent years – something which makes the new digital requirements for income tax especially important to the sector. Craig Ogilvie, director of Making Tax Digital at HM Revenue and Customs, explains what’s changing, and how professionals can adapt.

If you’re a self-employed worker in professional services – whether you’re a consultant, solicitor, or otherwise – Making Tax Digital (MTD) for Income Tax is a major change that will build on the digital tools you likely already use. It’s the biggest transformation since Self Assessment launched in 1997 and I believe this change will make your life easier.

What’s changing

From April 2026, if your turnover is above £50,000 from self-employment and property income combined, you’ll need to use MTD-compatible software to keep digital records for sending HMRC quarterly updates and your tax return. Those with turnover above £30,000 will follow from April 2027 and with turnover above £20,000, in April 2028.

Quarterly updates aren’t tax returns – they’re simple, unadjusted summaries of income and expenditure that your software generates automatically. Instead of cramming everything into January for the Self Assessment deadline, you’re spreading the load across the year. If you make any errors in a quarterly update, don’t worry, you can make corrections in the next update.

You’ll still submit a traditional Self Assessment for the previous tax year during your first year on MTD, but after that, everything can be handled through your software.

Many scramble in January to meet the Self Assessment deadline, often spending hours hunting for receipts or lost paperwork for the previous tax year. MTD for Income Tax will reduce this stress and extends what two million businesses already do successfully for VAT. A total of 69% of businesses surveyed experienced at least one benefit from MTD for VAT, and 67% said it reduced the potential for mistakes in their record keeping.

The benefits

• Real-time tax visibility: Your software will estimate your tax as you go, helping you plan and budget better.
• Simplified record keeping: Some software allows you to photograph receipts, log income as it comes in, and track expenses on the go – no more shoeboxes full of receipts or never-ending email searches.
• Automation: Many of the software options categorise expenses, tally invoices, and flag potential errors, making it easier to get your tax right the first time.

For those in professional services, it could mean better tracking of client fees and business expenses throughout the year.

Preparing for change

There are both free and paid software options available. You can choose from HMRC’s list of recognised providers, or use a combination of different software. The key is finding what works for you.

The best way to prepare is to sign up for a voluntary testing programme. This gives you access to our dedicated MTD Customer Support Team and lets you familiarise yourself with the process before it becomes mandatory. If you use an agent, they can sign you up. It’s fantastic that so far, more than 1,300 taxpayers have submitted their first quarter update as part of the testing phase.

Start by looking at your current record-keeping methods. If you’re already using spreadsheets or basic accounting software, bridging software may be available that can connect these to MTD requirements.

I’ve seen how MTD has helped VAT businesses become more efficient and accurate. Early feedback from our Income Tax testers has been positive, with many finding the system easy to use once they’re familiar with it.

HMRC is committed to supporting you through this transition. Explore your software options, consider joining the testing programme, and don’t hesitate to ask for help.