Who Will Be Affected?

If you’re a sole trader (not a limited company or partnership) or a private landlord, you’ll likely be included in MTD for Income Tax.

If you have multiple income streams — for example, you’re both a freelancer and a landlord — HMRC will combine the income to determine if you meet the threshold.

What Are the MTD for Income Tax Rules?

Here’s what the new rules mean in practice:

• Digital record keeping: You must use MTD-compatible software like Xero to keep digital records of all business and rental income and expenses.

• Quarterly submissions: You’ll submit summary updates to HMRC every quarter using your software — by 7 August, 7 November, 7 February, and 7 May. If you have both self-employed and property income, each will require separate updates.

• End-of-year submission: You’ll still need to finalise your income with a digital tax return by 31 January, replacing the traditional Self Assessment.

Why Use Xero for MTD for Income Tax?

Xero is fully HMRC-recognised and MTD-compatible. It’s a cloud-based accounting platform designed for small businesses, freelancers, and landlords.

With Xero, you can:

• Keep digital records of income and expenses

• Generate and send invoices (email or PDF)

• Connect your bank feeds for automatic transaction imports

• Submit quarterly updates and end-of-year information directly to HMRC

• View estimated tax liabilities throughout the year

• Use tools like Hubdoc or AutoEntry to digitise receipts and automate data entry

Together with Mint Accountants, we can help you use Xero as an intuitive interface and helpful support to keep your finances in check and MTD-ready.

Can I Still Use Paper Invoices or Records?

You can still issue paper invoices if needed, but the underlying data must be stored digitally in your MTD software. For example, if you handwrite an invoice, you’ll need to record the transaction in Xero promptly — either manually or through a tool like AutoEntry or Hubdoc.

That said, using Xero’s digital invoicing means you can send professional invoices by email, add “Pay Now” options, and get paid faster — reducing the need for paper altogether.

Is It Possible to Opt-Out?

MTD for Income Tax is mandatory if you meet the income threshold. You can only be exempt if you can prove digital exclusion (e.g. due to age, disability, or remote location). Exemptions are rare and require formal approval from HMRC.

Certain individuals, like those without a National Insurance number or receiving specific state benefits, may also be exempt, but these are exceptions.

Don’t Wait — Start Preparing Now

April 2026 may seem far off, but transitioning to digital accounting takes time. Start preparing by:

1. Contacting us and arranging a meeting to discuss your obligations

2. Digitising your records with our help and advice

3. We will provide you with any reminders to ensure you stay up to date

4. As Xero partners - you know you are in safe hands.

5. Our monthly subscription starts at £20.50, for £5 per week its less than a Costa Coffee!

By contacting us now, you’ll avoid the last-minute rush and make your move to digital accounting smoother and more beneficial for your business.