Making Tax Digital for Income Tax – BDO Managed Approach

From April 2026, HMRC have introduced a new regime called Making Tax Digital for Income Tax (MTDfIT).

What is MTD?

Making Tax Digital, or MTD, is an initiative from HMRC aimed at modernising the way individuals and businesses report their income and pay tax. It requires most people with business or property income to keep their records digitally and submit updates to HMRC using approved software, rather than relying on paper forms.

Who is affected?

You will be required to follow MTDfIT if:

• You are registered for self-assessment, and
• You receive income from self-employment, property (excluding income from a partner-ship, unless they receive disguised investment management fees or income based carried interest), or both, and
• Your combined turnover is more than £50,000
  
  

What does it mean for you?

• Digital record-keeping: You must keep all income and expenses in a digital format using HMRC-approved software.
• Quarterly updates: Instead of only filing once a year, you will submit simple summaries of income and expenses to HMRC every quarter. These are not full tax returns - they are progress updates to keep HMRC informed.
• Year-end return and declaration: At the end of the tax year, you provide any additional income or adjustments and submit a final digital tax return, including a declaration that everything is accurate.
  
  

Key points to know:

• You cannot manually retype records into the software; all figures must be digitally linked.
• Quarterly updates do not require tax calculations or adjustments - these can happen at year-end.
• Deadlines remain important: quarterly submissions, year-end tax returns, and payments must be made on time to avoid penalties.
• Software approved by HMRC ensures your submissions are fully compliant.
• Quarterly tax payments are not required.
  
  
  

BDO Managed

A fully managed MTDfIT service — you share your information, and we take care of everything else

What you need to do

• Provide your income and expense information in whichever format is easiest for you — bank statements, summaries, spreadsheets, PDFs or reports
• Send information that is not already structured as digital records, so we can create and maintain the official MTDfIT compliant version on your behalf compliant version on your behalf
  
  

What we provide

• We create and maintain your digital records, ensuring full compliance with MTDfIT requirements.
• We prepare and submit all quarterly MTDfIT updates and your year end digital data return, acting as your main and only tax agent.
• We complete your final declaration and support proactive tax planning, giving you clarity over cash flow, your tax position and any decisions ahead.
  
  

You benefit from:

• A fully outsourced service, with BDO managing your digital records and all submissions 
• Assurance that all MTDfIT obligations are handled seamlessly, accurately and on time
• Enhanced planning and advisory insight, enabled by real-time financial information
  
  

Quarterly and final declaration submission timeline 

How we work with you

Your Tax Information

Please submit your information to us in your preferred format for each quarter by the end of each quarterly period so we can update your digital records and submit your quarterly MTDfIT update to HMRC on time.

As we receive a high volume of information around each quarterly deadline, we want to make sure we manage submissions fairly and efficiently. To help with this, the following fee structure is in place:

• If we receive your information after the 20^th of the month following the quarter end, we may not be able to submit that quarters update before the HMRC deadline
• If your information arrives on or after the filing deadline, we will not submit your update. Instead, your data will be included in the next quarter’s submission. Please be aware that HMRC may issue a penalty for a late submission.
  
  

Following the end of the tax year, we will contact you to request the information required to complete your final digital data return, including a copy of the digital record you created.

If you have any questions or need support with your information, please get in touch with your usual BDO contact.