Are you ready for Making Tax Digital for Income Tax?

Making Tax Digital for Income Tax is a new way of reporting income to HMRC. Instead of submitting one tax return each year, sole traders and landlords will need to keep digital records and send quarterly updates to HMRC using Making Tax Digital for Income Tax compatible software.

Coconut tracks your income and expenses, helps you stay organised, and is HMRC-recognised for Making Tax Digital for Income Tax submissions.

You’ll need to manage your finances digitally, but tools like Coconut can simplify tax reporting and reduce admin time.

• Making Tax Digital for Income Tax will apply to sole traders and landlords who earn more than £50,000 in total business and/or property income per year from April 2026.
• Those earning between £30,000 and £50,000 will need to join Making Tax Digital for Income Tax from April 2027.
• Those earning between £20,000 and £30,000 will need to join Making Tax Digital for Income Tax from April 2028.

The rollout starts in:

• April 2026 for those earning over £50,000
• April 2027 for those earning £30,000–£50,000
• April 2028 for those earning £20,000-£30,000

Under Making Tax Digital for Income Tax, you won’t submit the traditional Self Assessment return. Instead, you’ll:

• Send quarterly updates of income and expenses
• Submit an End of Period Statement (EOPS) for each business
• Submit a Final Declaration (to report any other income and claim reliefs)

You must keep digital records of your income and expenses. These should be stored in Making Tax Digital for Income Tax compatible software, like Coconut.

You can still keep paper receipts, but the data must be recorded and stored digitally.

Coconut is fully Making Tax Digital for Income Tax compatible. This means it lets you:

• Easily record income and expenses digitally
• Send quarterly updates to HMRC
• Submit your End of Period Statement and Final Declaration

You can use spreadsheets only if they’re connected to bridging software that can send updates directly to HMRC. However, most people find it easier to use purpose-built apps like Coconut.

If you have more than one business or a mix of business and property income:

• You’ll need to keep separate digital records for each income source
• Submit a separate EOPS for each
• Then submit one Final Declaration to confirm your total income and tax due

HMRC will apply a points-based penalty system. If you miss deadlines or fail to comply:

• You’ll get a point for each failure
• Once you hit a threshold (e.g. 4 points), you’ll receive a fine
• Points expire after a certain time if you stay compliant

Initially, there may be a learning curve. But using Coconut to track income and expenses regularly can make managing your tax smoother, reduce surprises and even help you save money.

Yes, absolutely. Many accountants are already using Coconut to support clients. They can:

• Review your quarterly reports
• Submit declarations on your behalf

If you're affected, it’s a good idea to start preparing now by choosing Making Tax Digital for Income Tax compatible software like Coconut. You could also prepare by:

• Starting to keep digital records
• Speaking to your accountant to get prepared early

You can reach our support team via chat or email, Monday to Friday, for help with Making Tax Digital for Income Tax and using Coconut.

You’ll need the user ID and password you got when you signed up for Self Assessment.

You may be asked to provide further proof of your identity to use this service.

Click here to sign up!