How Making Tax Digital for Income Tax will affect therapists

Making Tax Digital for Income Tax (MTD IT) impacts how self-employed UK therapists report their income to HMRC. Since April 2026, many need to keep digital records and submit quarterly updates to HMRC. This guide explains who’s affected, what the changes involve and how to prepare with confidence ahead of the new rules.

If you run a therapy practice in the UK, such as counselling, physiotherapy or psychotherapy, Making Tax Digital for Income Tax (MTD IT) is a significant change to your tax obligations. If you are self-employed and earning over £50,000, it has applied to you since April 2026.

With MTD IT, instead of filing one Self Assessment return each year, you need to report to HMRC regularly throughout the year using digital records and software.

That might seem unsettling at first, especially when your focus is on clients rather than compliance. But with the right preparation (and the right systems in place), it doesn’t have to be daunting.

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What is Making Tax Digital for Income Tax (MTD IT)?

MTD IT is HMRC’s move towards a fully digital tax system. For self-employed therapists, it changes both how and when you report your income and expenses. In simple terms, MTD IT means:

  • keep your business records in a digital format
  • send regular updates to HMRC during the year using recognised software
  • complete a final annual declaration to confirm your tax position

In doing so, your tax information remains current throughout the year. This gives you clearer visibility of how your practice is performing financially.

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Which therapists need to use MTD IT?

Whether MTD IT applies to you depends on your qualifying income, not your profit. This is your total gross income before expenses and the rollout is phased:

  • in April 2026 for those earning over £50,000 (now in effect)
  • in April 2027 for those earning over £30,000
  • in April 2028 for those earning over £20,000

Qualifying income includes your private therapy fees and any property income you receive. It does not include employed income, such as NHS work, where you’re paid as an employee.

For example, if you earn £45,000 from your therapy practice and £8,000 from renting out a room, your qualifying income is £53,000 and you would have been required to join MTD IT from April 2026.

HMRC uses your 2024/25 Self Assessment (submitted by 31 January 2026) to decide whether you fall into the first MTD IT wave. Checking your income now can help you avoid surprises later.

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What MTD IT’s digital record-keeping means for therapists

Moving to MTD IT means tracking your practice finances digitally throughout the year. You won’t need to upload every receipt, but you will need accurate digital records to collate and total up your income and allowable expenses.

HMRC doesn’t provide free software for this. Instead, you’ll need to use MTD IT-recognised software or continue working with a spreadsheet that is then linked to HMRC’s portal through bridging software such as TaxNav.

Your digital records will typically cover:

  • client fees and other income
  • room hire or home office costs
  • supervision, CPD and professional subscriptions
  • insurance, therapy materials and software
  • business phone, internet and admin costs
  • accountancy fees

Keeping these records up to date as you go gives you a clear picture of your finances and removes the stress of last-minute record-gathering.

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What quarterly reporting looks like in practice

Under MTD IT, you will send HMRC four quarterly updates each year. Each update shows your cumulative income and expenses for the tax year to date, not just what’s happened in the last three months. Each update reflects:

  • the client fees you’ve received
  • the costs of running your practice
  • any qualifying property income alongside your therapy work

Even if you have a quiet quarter or no income at all, you still need to submit an update. With good digital record-keeping, this can become a simple routine. Many therapists may also find that seeing an estimated tax figure build across the year (from the quarterly updates) will help with budgeting.

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Why the final annual declaration still matters

By 31 January after the end of the tax year, you’ll complete a final declaration. This is the MTD IT version of the traditional Self Assessment return.  The return confirms:

  • income already submitted
  • any additional income outside your therapy practice
  • your allowable expenses and reliefs
  • your official tax position for the year

With most of the work already done during the year, the final declaration becomes a confirmation exercise rather than a stressful January scramble.

It’s important to note that you won’t be able to submit your final declaration unless all four quarterly updates are completed, and failure to file will trigger HMRC’s MTD IT penalty system.

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What is HMRC-recognised software?

To comply with MTD IT, you must use HMRC-recognised software. This can be full accounting software or bridging software that connects spreadsheets to HMRC. TaxNav offers both and is HMRC-recognised.

TaxNav is designed for people with simple tax affairs and works well for those working as therapists. It’s also designed with affordability in mind, and using the TaxNav software you can cost-effectively:

  • Record income and expenses directly into the software, via a browser on your phone or computer
  • Continue using Excel spreadsheets if you prefer, by submitting figures through our handy bridging software
  • Use one of TaxNav’s spreadsheets if you’d like
  • Submit quarterly updates and your final declaration in one simple and easy to use place

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How to get MTD-IT ready

If you haven't started yet, don't panic. Focus on these basics as, once those are in place, everything else follows naturally.

  • Confirm if your gross income will trigger the MTD IT rules with HMRC's page
  • Register with HMRC for MTD IT before you begin.
  • Select your software - TaxNav offers a 30-day free trial
  • Start keeping and recording your digital records - for example, directly into our software or in a spreadsheet using our bridging software. Until your final return, this does not need to be 100% accurate.
  • Diarise when you need to submit your quarterly updates, TaxNav will remind you.
  • Diarise your final (annual) declaration deadline

People with income over £30,000 from self-employment and/or property will need to join MTD IT from April 2027. You can, however, volunteer to join early and get familiar with it before your HMRC deadline.

With TaxNav you automatically get a 30-day free trial and we offer low-cost subscriptions to keep things affordable. An annual subscription is £60+VAT or pay as you go for £6+VAT per month.


Explore and try out our user-friendly MTD IT software

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