If you’re a therapist or mental health professional in private practice, Making Tax Digital (MTD) for Income Tax is a change you can’t afford to ignore.
HMRC is moving the tax system towards a fully digital model, meaning that traditional methods of tracking income—such as handwritten notes or basic spreadsheets—will no longer be sufficient. Instead, therapists will need to use approved accounting software to record income and expenses and submit updates regularly.
MTD will apply from April 2026 if your annual business or property income exceeds £50,000, with lower thresholds introduced in the following years:
- April 2027: over £30,000
- April 2028: over £20,000
As a therapist, your responsibilities will include:
- Keeping digital records of session income and business expenses
- Using MTD-compatible software
- Submitting quarterly updates to HMRC
For many in the mental health field, finances are often managed alongside a busy client schedule. The idea of quarterly reporting may feel overwhelming—but it can actually bring benefits when set up properly.
With the right systems in place, you can:
- Stay on top of your income throughout the year
- Reduce last-minute stress at tax deadlines
- Gain clearer insight into your practice’s financial health
It’s also important to consider the specific nature of therapy work—such as multiple income streams (private clients, platforms, supervision) and allowable expenses like room hire, CPD, and insurance.
Working with an accountant who understands the needs of therapists can make all the difference. Support with software setup, ongoing bookkeeping, and compliance ensures you can focus on your clients, not your admin.
Preparing early for MTD will help you avoid disruption and give you confidence that your practice is fully compliant as the new rules come into effect.