Making Tax Digital: Why You May Have Received a Letter – and What to Do Next
If you’ve recently received a letter from HMRC about Making Tax Digital (MTD), you’re not alone.
HMRC has started writing to individuals and landlords who are likely to be affected by the next phase of Making Tax Digital for Income Tax. For many people, the letter has come as a surprise — and raised questions about what it means and what action is required.
The good news is that there is time to prepare, and with the right support, the transition can be straightforward.
What Is Making Tax Digital for Income Tax?
Making Tax Digital (MTD) is HMRC’s plan to modernise the tax system by moving away from annual returns towards digital record-keeping and more regular reporting.
From April 2026, MTD for Income Tax will apply to individuals who have:
Self-employment income, and/or
Rental income
with combined annual turnover over £50,000.
A second phase is expected from April 2027 for those with income over £30,000.
What Will Change?
If you fall within the scope of MTD, you will need to:
Keep digital records of your income and expenses
Use HMRC-approved software
Submit quarterly updates to HMRC
Submit a final end-of-year declaration
Instead of one annual self-assessment return, reporting will become a more regular process throughout the year.
Why HMRC Is Sending Letters Now
HMRC is writing to taxpayers who appear, based on previous returns, to meet the income threshold.
The purpose of the letter is to:
Make you aware of the upcoming changes
Encourage early preparation
Give you time to consider software and processes
Receiving a letter does not necessarily mean you need to take immediate action — but it is a sign that your affairs should be reviewed.
What You Should Do Next
If you’ve received a letter, the best next steps are:
1. Confirm whether the rules will apply to you
Your income level, business structure and circumstances all matter.
2. Review your current record-keeping
If you are still using spreadsheets or paper records, you may need to move to digital software.
3. Avoid leaving it until 2026
Moving to digital systems takes time, and early adoption makes the transition much smoother.
What This Means for Landlords and Sole Traders
MTD will particularly affect:
Landlords with multiple properties
Self-employed individuals with higher turnover
Those currently managing records manually
For many, the biggest change will be the move to quarterly reporting, which requires more regular bookkeeping.
However, the upside is better visibility of your financial position throughout the year — and fewer year-end surprises.
How Exchange Accountants Can Help
At Exchange Accountants, we are digital accounting specialists and have been helping clients move to cloud-based systems for many years.
We can help you:
Confirm whether MTD applies to you
Choose and set up HMRC-approved software
Move your records from spreadsheets or paper
Manage quarterly submissions
Ensure you remain fully compliant
Most importantly, we make the process simple and manageable — without unnecessary disruption to your business or property income.
Don’t Ignore the Letter
Making Tax Digital is one of the biggest changes to personal tax reporting in recent years. While the deadlines may seem some way off, early preparation will make the transition far easier.
If you’ve received a letter from HMRC — or think you may be affected — now is the right time to review your position.
📞 028 9263 4135
📧 info@exchangeaccountants.com
🌐 www.exchangeaccountants.com
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