How Making Tax Digital for Income Tax will affect therapists

Making Tax Digital for Income Tax (MTD IT) will transform how self-employed UK therapists report their income to HMRC. From April 2026, many will 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) will be a significant change to your tax obligations. If you are self-employed and earning over £50,000, it may apply to you from April 2026.

With MTD IT, instead of filing one Self Assessment return each year, you’ll 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 you will:

  • 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 begins:

  • in April 2026 for those earningover £50,000
  • in April 2027 for those earningover £30,000
  • in April 2028 for those earningover £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 be required to join MTD IT from April 2026.

HMRC will use 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 yourtherapy practice
  • your allowable expenses andreliefs
  • your official tax position for theyear

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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Getting your therapy practice-ready for MTD IT

The best way to approach MTD IT is to prepare early and gradually. Start by reviewing your 2024/25 figures and calculating your qualifying income before expenses. HMRC is also writing directly to therapists who are likely to be mandated into MTD IT.

You’ll also need to choose MTD IT-recognised software that connects directly to HMRC. If you already manage your practice finances in Excel, TaxNav allows you to continue using your spreadsheets while staying fully compliant. We also have a user-friendly app you can use to record income and expenses on the go.

You must register for MTD IT before April 2026. If you work with an accountant, they’ll need the correct digital authorisation in place, so chat to your adviser soon.

To make the transition easier, you can also join the current HMRC pilot to familiarise yourself with the new obligations. TaxNav is free to use if you join us via the pilot scheme.

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Meet your MTD IT requirements with TaxNav

TaxNav is designed specifically for the self-employed to manage their own tax records with confidence. It helps you keep accurate digital records, securely submit updates to HMRC, track your estimated tax bill, and streamline your final annual declaration.

If you already use spreadsheets, TaxNav integrates seamlessly so you can continue working in a familiar way while remaining fully compliant with MTD IT.

With the April 2026 mandate approaching for higher-earning therapists, now is the ideal time to prepare. TaxNav is free to use for the remainder of the 2025/26 tax year, giving you time to practise before MTD IT becomes compulsory.

Find out more or join the TaxNav pilot programme and get ready for MTD IT with confidence. We’ll help you stay focused on your clients while your tax stays firmly on track.

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