The new tax rules, explained.

What is actually changing

Today, most self-employed people and landlords report their income to HMRC once a year, through a Self Assessment tax return. Making Tax Digital for Income Tax replaces that single annual return with a digital, quarterly rhythm.

From the start date that applies to you, three things become routine:

• Keep digital records of your business and property income and expenses, as you go. No more shoebox of receipts or a year-end spreadsheet catch-up.
• Send HMRC a quarterly update, four times a year, summarising your income and expenses to date, using MTD-compatible software.
• Submit a final declaration after the tax year ends, confirming the year's figures and any other income. This replaces the old Self Assessment return.

The tax you pay, and the deadlines for paying it, do not change. What changes is the record-keeping and the reporting cadence.

The tax and the payment dates stay the same; only the way you keep the books gets steadier.

Who it affects, and when

Whether you are in scope depends on your qualifying income: your combined gross income from self-employment and property, before expenses, in a tax year. It is being phased in by income band.

HMRC looks at the income figure on your most recent Self Assessment return to decide when you are mandated. If your income later drops below the threshold, specific rules determine whether you can leave the regime, so it is worth checking your position each year rather than assuming.

Partnerships, and those with more complex affairs, have their own timeline that HMRC has indicated will follow later.

The quarterly updates, in detail

A quarterly update is a running total of your income and expenses for the year so far, grouped into HMRC's categories. The standard periods (using HMRC's default tax-year quarters) run:

Each update is due roughly one month after its period ends. The figures are cumulative and never your final word: you correct and finalise everything after the year closes. If calendar-month quarters suit your bookkeeping better, you can choose those instead.

The final declaration

After the tax year closes, you make a final declaration. This is where you confirm your business and property figures, add any other income (employment, savings, dividends, and so on), claim your reliefs and allowances, and arrive at your final tax position. It replaces the Self Assessment return you file today, and is due by the usual 31 January deadline.

What you will need

• MTD-compatible software that can keep digital records and submit updates directly to HMRC. Spreadsheets alone are not enough unless they are connected through bridging software.
• A digital link from where your data is recorded to where it is submitted. Re-typing figures by hand between systems is not permitted.
• Steady habits. Because reporting is quarterly, leaving the bookkeeping until January no longer works. Done little and often, it is far less painful than the old annual scramble.