Making Tax Digital: what it means if you're a therapist in private practice

If you run a private practice as a sole trader, the way you report your income to HMRC changed this April, and the first deadline has already passed.

This is a plain-English summary of what Making Tax Digital for Income Tax actually requires. It is not tax advice. Your own circumstances (how you're set up, what counts as your qualifying income, whether you have other work alongside your practice) decide what applies to you, and those are questions for your accountant. What this piece can do is make sure you know the change exists, because a surprising number of therapists still don't.

What actually changed

Under Self Assessment, you filed once a year: one return, one deadline in January, one moment of dread.

Making Tax Digital for Income Tax replaces that rhythm with a quarterly one. If you're in scope, you now need to:

• keep your business records digitally, rather than in a notebook or a shoebox of receipts
• send HMRC a quarterly update through compatible software
• submit a final declaration after the tax year ends, which is where reliefs and adjustments get sorted out

The quarterly updates are not four mini tax returns. They're summaries of income and expenses to date: cumulative, not a fresh calculation each time. You still get one annual settling-up. But you are now in contact with HMRC five times a year instead of once, and that contact has to come out of software rather than a form you fill in by hand.

Who it catches, and when

It arrives in waves, by income:

| From | Qualifying income over | |---|---| | April 2026 | £50,000 | | April 2027 | £30,000 | | April 2028 (planned) | £20,000 |

The number that matters is qualifying income, and this is the part that catches therapists out: it's your gross self-employed income before expenses, added to any property income. It is not your profit, and it is not what you take home.

That distinction matters enormously in private practice. A therapist seeing 20 clients a week at £60 is turning over roughly £57,000 a year before room hire, supervision, insurance, membership, training and software come out. Their profit might be well under £40,000. But it's the £57,000 figure that decides whether they're in scope.

So the honest summary: if you're full-time in private practice, you are probably already in the first wave. If you're part-time, the April 2027 threshold of £30,000 is likely to reach you, and 2028 will pull in most of the rest.

The deadline you may have already missed

The first quarterly period ran from 6 April 2026 to 5 July 2026, with the update due in early August.

If you're in scope and that passed you by, don't panic, but don't ignore it either. HMRC operates a points-based penalty system for late submissions: each missed deadline earns a point, and at four points you get a £200 penalty, with a further £200 for each missed deadline after that.

The design is deliberately forgiving of one slip and unforgiving of a pattern. One missed quarter is a warning shot. Four is a bill. If you've missed one, the useful next step is to talk to your accountant about getting compliant for the current quarter rather than trying to reconstruct the past on your own.

What this means practically

Three things change in how a practice runs day to day.

Your records have to be digital. Not "eventually typed up", but kept digitally as you go. For most solo practitioners this is the real shift, because plenty of excellent therapists have run perfectly good practices for years on a paper diary and an annual afternoon with a shoebox.

You need software that can talk to HMRC. Quarterly updates have to be submitted through compatible software. That might be bookkeeping software, an accountant filing on your behalf, or bridging software connecting a spreadsheet. What it can't be is a paper form.

Your bookkeeping can't be an annual event any more. If you reconcile once a year in January, four quarterly deadlines will be miserable. If you're capturing income and expenses as they happen, they're close to a non-event. That's the honest argument for getting your practice admin in order: not compliance for its own sake, but the difference between four small tasks and four bad weekends.

Where practice software fits, and where it doesn't

Worth being straight about this, because there's a lot of vague marketing in this space.

Practice management software, including ours, is not MTD-compatible filing software. Faresay doesn't submit anything to HMRC on your behalf, and you should be sceptical of any practice tool that implies it does without saying exactly how.

What practice software genuinely helps with is the layer underneath: having a clean, complete, digital record of what you invoiced, what was paid, when, and by whom. That's the raw material your quarterly update is built from. If your income data is already accurate and exportable, the filing step is straightforward whether you do it yourself or hand it to an accountant. If your income data lives across a diary, a bank statement and memory, no filing software will save you.

In Faresay that means every session and payment is recorded as it happens, and you can export your payments as a CSV whenever you want it: for your accountant, your own records, or to take with you if you ever leave.

What to do next

1. Work out your qualifying income: gross, before expenses, plus any property income. Compare it to the thresholds above.
2. Ask your accountant whether you're in scope, and for which wave. If you don't have one, this is a reasonable moment to get one; the fee is a deductible business expense.
3. Check what you missed, if anything, and get current rather than perfect.
4. Get your income recorded digitally as it happens, so the quarterly updates draw on something real.
5. Decide who files. Plenty of therapists will hand this to an accountant and never touch the software themselves. That's a completely legitimate answer.

The honest bit

This is genuinely more admin. It's reasonable to be annoyed about that. It lands on sole traders who are already carrying their own insurance, supervision, CPD, registration and ICO fee without an employer behind them.

But the change that makes it survivable isn't tax software. It's keeping the underlying record of your practice tidy as you go, so that reporting is a matter of reading something you already have rather than reconstructing a year from fragments.

This article describes HMRC rules as they stood in August 2026 and is provided for general information. It is not tax, accounting or financial advice, and it does not take account of your circumstances. Check the current position on GOV.UK and take advice from your accountant before making decisions. Thresholds and dates have moved before and may move again.

Faresay is practice management software for UK therapists. See how it works, or compare it with the alternatives.