If you’ve been hearing about Making Tax Digital for Income Tax (MTD for ITSA), you’re not alone — and if you’re starting a business soon, you might be wondering:
“If I register after April 2026, do I have to follow MTD straight away?”
The short answer?
No — not immediately. But you will need to plan for it.
Let’s break it down properly 👇
What is MTD for ITSA (quick recap)?
HM Revenue & Customs (HMRC) is introducing MTD for ITSA to modernise how sole traders and landlords report income.
Instead of one tax return per year, you’ll need to:
- Keep digital records
- Submit quarterly updates
- File a final year-end declaration
Who must follow MTD from April 2026?
From 6 April 2026, MTD applies if:
- You are a sole trader and/or landlord, AND
- Your total business + property income exceeds £50,000, AND
- This is based on your 2024/25 tax return
This is key: MTD is based on past income — not when you start your business.
So what if you start a business AFTER April 2026?
Here’s where a lot of people get confused.
You will NOT join MTD immediately
If you start a business after April 2026:
- You won’t have submitted a tax return yet
- HMRC won’t know your income level
- Therefore — you cannot be mandated into MTD straight away
HMRC guidance confirms:
You only need to start MTD after you’ve submitted your first Self Assessment tax return.
When will you be brought into MTD?
You’ll join MTD later, once:
- You’ve submitted a tax return
- Your income exceeds the threshold
- HMRC confirms you need to join
Example:
- You start your business in May 2026
- You file your first tax return in January 2028 (for 2026/27)
- If your income is over £50k (or future thresholds)…
You’ll be brought into MTD from a future tax year — not retrospectively
Don’t forget — thresholds are changing
MTD is being phased in:
- £50,000 → April 2026
- £30,000 → April 2027
- £20,000 → April 2028
So depending on your growth, you could be brought in sooner than expected.
What this means in real life
Just because you’re not forced into MTD straight away doesn’t mean you should ignore it.
In fact, starting right makes life MUCH easier.
Without MTD-ready systems, you’ll likely face:
- Messy spreadsheets
- Missed expenses
- Stress at year-end
- More accountancy fees fixing things later
Our advice at Biking Bookkeeper
If you’re starting a business now or after April 2026:
Set up your systems as if MTD already applies
That means:
- Using Xero for real-time bookkeeping
- Capturing receipts with Apron
- Automating as much as possible from day one
This way:
- You’re compliant when the time comes
- You always know your numbers
- And you avoid a painful transition later
Final thought
MTD isn’t about compliance — it’s about visibility and control.
The businesses that win aren’t the ones scrambling to catch up…
They’re the ones who build smart systems from the start.
Check for more information at HMRC website
Need help getting MTD-ready?
Whether you’re just starting out or already trading, we can help you:
- Set up your tech stack
- Automate your processes
- Stay ahead of MTD (without the headache)
Get in touch via our website:
