MTD for Income Tax: your path to confident compliance

A new era has begun for the UK’s sole traders and landlords. The Making Tax Digital for Income Tax (MTD for IT) mandate has officially come into effect, starting with those that have a gross income over £50,000,  meaning your path to tax compliance has officially become digital-first. 

We know that for many, the world of business costs and tax can be difficult to get to grips with. In fact, 81% said better guidance was needed on key areas of compliance.* Our goal is to make compliance feel easier and take some of that load off your shoulders so you can stay focused on your business.

A seamless, end-to-end experience 

Whether you’re already using software or just starting your digital transition, Xero has everything you need to stay on top of it in one single subscription. From tools that turn receipts into records, to quarterly filing and the final submission, it’s all in one HMRC-recognised plan and all in one place.

From day one, you can start building good habits. Keep your records digitally in seconds by snapping receipts, pulling in bank transactions and keeping different income streams tidy within a single Xero subscription. As day-to-day bookkeeping happens in Xero, that same data then flows straight through to the first MTD quarterly update and, later, the final declaration. This means no one is re-keying figures or juggling multiple systems, just moving through each MTD step inside Xero.

For our accounting and bookkeeping partners, Tax Manager in Xero HQ and Xero Practice Manager will also provide you with a bird’s-eye view of all your clients’ compliance obligations, and can even be filtered by tax type and status.

Getting started in Xero: your 3-step checklist

While the changes might feel nerve wracking, getting started is straightforward and can be done in three simple steps. 

1. Register: sign-up for MTD for IT with HMRC via the website
2. Check permissions: make sure that your organisation type in Xero is set correctly to either ‘Sole Trader’ or ‘Person’ (including landlords).
3. Authorise: Navigate to MTD within Xero and link your account with HMRC to enable a smooth, secure connection for your first filing.

Finally, be mindful that in your first year of MTD for Income Tax you’ll likely have two tax years in progress at the same time. You’ll need to file your final non-MTD Self Assessment return through your usual route first, before moving into digital quarterly reporting in Xero for MTD for Income Tax. This can help you focus on building confidence with the new rhythm of quarterly updates, without the January Self Assessment deadline hanging over you.

We’re here to help

You don’t have to navigate the latest changes alone. If you’re still feeling unsure, register for one of our webinars on how to get ready for phase one here, talk to an accountant or bookkeeper, or read our article on how to get set-up for MTD for IT on Xero Central.

If you are an accountant or bookkeeper, everything you need to know, including setup resources for using Xero, can be found right here

MTD for IT is a big shift, but with the right tools and a bit of preparation, it’s an opportunity to modernise and gain more control over your finances. 

* Based on online research by Censuswide between 16th March and 24th March 2026. It surveyed 1000 UK small business owners and operators or directors that hold decision-making responsibilities and had an annual revenue of over £50,000 and will need to comply with MTD for IT from 6th April 2026.