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The first official deadline for Making Tax Digital (MTD) for Income Tax is 7 August 2026.

By this point, if you are a sole trader or landlord earning over £50,000 a year, you must have registered and filed your first quarterly report to HMRC.

What is MTD?

HMRC introduced MTD in an attempt to modernise the tax system.

It requires taxpayers to keep digital records and use compliant software.

From April 2026, you should have been collecting digital records of your income and expenses to be sent off for the upcoming 7 August deadline.

You must submit these updates quarterly to HMRC, plus a final end-of-year tax return.

If you have a gross income of over £50,000 from either rental or self-employment income, you are obligated to comply with MTD in 2026.

HMRC will use your 2024/25 tax return to determine whether you are inside or outside of the regime.

It is important to note that these qualifying rates for MTD will fall to £30,000 in April 2027 and fall again to £20,000 in April 2028.

What you need to do

To prepare for MTD, eligible sole traders and landlords must make the shift from paper records to fully digital records, recording and submitting information through HMRC-recognised software.

If you continue to use spreadsheets, you will need to find a suitable bridging solution to connect to HMRC’s system.

You should calculate your gross qualifying income to see if you need to comply with the rules.

If you earn over the threshold, then you must formally register for the MTD service with HMRC using your Government Gateway User ID and password.

Software is important, so you must make the switch to MTD-compliant solutions to send your tax documents over to HMRC.

If the software you are using is not compliant, your documents may not be processed.

Having proper bookkeeping procedures in place will help with the frequency of the declarations.

What are the penalties if you miss the deadline?

HMRC has implemented a ‘soft landing’ period for MTD during the 2026/2027 tax year. This means that a late submission will not result in any penalty points for any missed quarterly updates in the first year.

However, you are still legally required to maintain digital records and make the submissions on time.

Missing deadlines can cause unnecessary stress and put you behind when the end-of-year declaration is due.

How we can help

If you have not already, you should consider appointing an accountant to support you with the changes to MTD.

Our expert team can help you stay compliant while handling all of the new obligations.

Get in touch today for advice on managing MTD before the deadline hits.

In a shocking turn of events, Rachel Reeves has confirmed the ISA tax that the Treasury previously deemed ‘nonsense’.

From April 2027, savers could face a 22 per cent tax on interest earned from uninvested cash held in a Stocks and Shares ISA.

What changes are being made to ISAs?

The Autumn Budget confirmed several well-publicised ISA changes for the 2027/28 tax year.

From April 2027, the overall tax-free ISA allowance will remain £20,000, but the rules will change for under-65s.

Under-65s will only be able to pay up to £12,000 into a Cash ISA each tax year, rather than investing the full £20,000 allowance as before.

The remaining £8,000 will need to be placed in another type of ISA, such as a Stocks and Shares ISA.

However, in a further twist to the new rules, a 22 per cent tax on interest earned from uninvested cash held in Stocks and Shares ISAs may be imposed from April 2027.

This would bring the rate in line with the existing savings interest tax and reduce the benefit of holding cash in a Stocks and Shares ISA.

The proposals also include a ban on transferring funds from Stocks and Shares ISAs back into Cash ISAs as a means of circumventing the reforms.

What could the ISA changes mean for savers?

The Government is concerned that people may use Stocks and Shares ISAs like cash ISAs by leaving money uninvested, allowing them to bypass the £12,000 Cash ISA limit and continue earning tax-free interest.

For someone holding only a few hundred pounds before investing, the cost is likely to be minimal.

However, those holding larger cash balances in a Stocks and Shares ISA may feel a more noticeable impact.

If you already invest through a Stocks and Shares ISA, it is worth checking how much cash is currently sitting uninvested in your account.

A small cash buffer can be useful for platform fees or buying opportunities, but holding large amounts uninvested may become less tax-efficient over time.

These plans are not due to take effect until April 2027, so you can still put up to £20,000 into a Cash ISA this tax year if you wish, but you should ensure that your investment strategy accounts for upcoming changes.

Reviewing your tax-efficient investment plan

Planning ahead can help you organise your money and reduce the risk of being affected by the proposed tax on uninvested cash in Stocks and Shares ISAs.

If you are unsure how best to manage tax on your ISAs, speak to one of our experienced team members for guidance on tax-efficient planning.

Get in touch today for advice on how to use tax-efficient investments within your wider personal tax plan.