If you went into private practice to focus on your clients, the last thing you want to deal with is another set of rules from HMRC. But this one matters, and it is already in effect.
From April 2026, the way self-employed therapists report their income has changed. It is called Making Tax Digital for Income Tax, and it affects anyone in private practice who files a Self Assessment tax return. Whether you are a counsellor, psychotherapist, psychologist, or any other mental health professional working as a sole trader, this applies to you, or it will soon.
This is the biggest change to self-employment taxation in a generation. Around 860,000 sole traders and landlords are in the first wave, with millions more joining over the next two years. At the same time, research suggests that nearly a third of those affected do not feel confident they will be ready.
Here is what you need to know.
What is Making Tax Digital?
Making Tax Digital (MTD) is HMRC's move to transition the UK tax system to a fully digital model. It has been in development since 2015 and has already been introduced for VAT-registered businesses since 2022. It now applies to Income Tax, which means it now applies to self-employed therapists.
In practical terms, instead of completing one annual Self Assessment tax return, you are required to keep digital records throughout the year and submit quarterly summaries of your income and expenses using approved software.
The objective is to reduce errors, provide more up-to-date information, and remove the reliance on a single annual submission. HMRC's research from MTD for VAT indicates that digital record-keeping does reduce errors. Most businesses reported that software becomes straightforward once established, although many underestimated the transition effort.
Whether this is viewed as a reasonable improvement or an additional burden on an already admin-heavy profession is a separate discussion. The key point is that this is now a requirement.
Does this affect me?
Almost certainly. If not now, then in the near future.
The determining factor is your gross income, meaning total income before expenses, not profit.
The rollout is phased:
| Date | Threshold |
|---|---|
| April 2026 | Gross self-employment and property income exceeded £50,000 in the 2024/25 tax year |
| April 2027 | Threshold reduces to £30,000 |
| April 2028 | Threshold reduces to £20,000 |
The term "gross" is critical here. HMRC is not assessing what you retain after expenses, but what comes in before costs such as room hire, insurance, and supervision.
To make this more concrete:
Example 1: Full-time private practice
You see 20 clients per week at £60 for 48 weeks. Gross income is £57,600. You fall into the first phase, regardless of net income after expenses.
Example 2: Mixed practice
You work three days privately at £70 per session, generating £48,300, and two days via PAYE. Only private income is relevant. This places you below £50,000 but above £30,000, meaning April 2027.
Example 3: Part-time with property income
£25,300 from therapy plus £12,000 rental income results in £37,300. This falls into April 2027.
HMRC determines eligibility based on submitted tax returns. This is not optional or elective.
Two important exceptions
Limited companies
If you operate through a limited company, MTD for Income Tax does not apply. Corporation Tax follows separate rules. However, any personal self-employment or property income may still bring you into scope.
Partnerships
Currently not included in MTD for Income Tax. This may change in future, but is not yet mandated.
What actually changes in practice?
Three areas change. None are technically complex, but they do require a different way of working.
1. Your records must be digital from the start
Paper records entered at year end are no longer sufficient. Financial records must be maintained digitally from the beginning of the tax year within MTD-compatible software.
This means recording income and expenses consistently, ideally weekly or monthly, rather than retrospectively.
This does not require uploading every receipt immediately. It requires that the financial data, income and categorised expenses, exists within compliant software.
For most therapists, this comes down to two core elements: a record of client payments and a structured record of business expenses.
This is where many therapists already have part of the solution in place. If you are using a system like My-Therapy-Suite, your invoices, client payments, and business expenses are already recorded digitally in one place. MTD does not require anything beyond what good record-keeping already looks like. Your data just needs to be structured and complete throughout the year, rather than pulled together at year end.
2. You send quarterly summaries to HMRC
Four times per year, your software submits a summary of income and expenses.
These are category-level totals, not individual transactions. It is a summary view, not a full return. If an error is made, it can be corrected in a subsequent submission.
If your turnover is below £90,000, which applies to most therapists, you can use consolidated expenses. This allows you to submit a single total for expenses rather than detailed categories.
For the 2026/27 tax year, deadlines are:
| Period | Submission deadline |
|---|---|
| 6 April to 5 July | 7 August |
| 6 July to 5 October | 7 November |
| 6 October to 5 January | 7 February |
| 6 January to 5 April | 7 May |
There is typically a one-month window after each period to submit.
From a practical perspective, the main requirement is that your data is already structured correctly. Systems that categorise income and expenses in line with HMRC requirements reduce this to a submission step rather than a reporting exercise.
We are currently exploring a direct HMRC submission integration within My-Therapy-Suite. The aim is to allow these quarterly updates to be submitted directly from the platform, without exporting data into separate accounting software. The underlying requirement remains the same: your records must be complete and correctly categorised.
3. You still complete a year-end declaration
After the fourth quarterly update, you submit a Final Declaration by 31 January. This replaces the Self Assessment return.
This is where allowances are applied, adjustments are made, and the final tax position is confirmed. If you use an accountant, this is likely unchanged from your current process.
Tax payment dates remain the same. Payments are still due on 31 January and 31 July. Quarterly submissions are reporting requirements, not payment events.