Making Tax Digital (MTD)
Big changes are coming
From April 2026, HMRC is rolling out Making Tax Digital for Income Tax. If you’re self-employed or a landlord earning over certain thresholds, the way you report your income to HMRC is changing completely.
No more once-a-year tax returns. Instead, you’ll need to keep digital records and send quarterly updates to HMRC throughout the year using approved software.
It’s the biggest change to the tax system in decades, and it affects hundreds of thousands of sole traders, freelancers, and landlords across the UK.
But there’s no need to panic, because we can handle the whole thing for you.
Who needs to comply with MTD for Income Tax?
From April 2026 self-employed individuals and landlords with combined gross income from self-employment and property over £50,000 from the tax year 2024/25 must start using MTD for the 2026/27 tax year.
From April 2027 the threshold drops to £30,000. If your qualifying income exceeds this in 2025/26, you’ll need to comply from April 2027.
From April 2028 the threshold is expected to drop again to £20,000, though this is still subject to parliamentary approval. Important: “qualifying income” means your gross income (before expenses) from self-employment and property combined. It doesn’t include employment income, pensions, dividends, or savings interest.
What are the requirements of MTD?
If you fall into MTD eligibility, there are three main requirements:
1. Use MTD-compatible software
You’ll need to keep your business records digitally using software that connects to HMRC’s systems. Basic spreadsheets and paper records won’t be acceptable anymore.
2. Send quarterly updates
Four times a year, you’ll need to submit summaries of your income
and expenses to HMRC. The deadlines are roughly every three months – 7 August, 7 November, 7 February, and 7 May.
3. Submit a final declaration
At the end of the tax year, you’ll need to submit a final declaration through the same software, making any adjustments and claiming reliefs. This replaces the traditional Self Assessment tax return.
How we can help
Whether you want us to handle everything or just need support getting set up, we can tailor our MTD service to fit what you need.
- Full MTD compliance service – we handle everything from software setup to quarterly submissions and final declarations, keeping you fully compliant.
- MTD-ready bookkeeping – we keep your digital records up to date throughout the year using MTD-compatible software.
- Quarterly submissions – we prepare and submit your quarterly updates to HMRC on time, avoiding penalties.
- Final declaration and tax planning – we finalise your year-end figures, claim all reliefs, and advise on tax-saving opportunities.
- Software setup and training – we’ll get you set up with the right software and show you how to use it if you want to manage some of the work yourself.
- Support when you need it – ongoing help and advice to answer your questions and navigate the new requirements.
Already using cloud accounting software?
If you’re already using cloud accounting software like Xero, QuickBooks, or FreeAgent, you’re part of the way there. Most of these platforms are already MTD-compatible or will be by the time MTD becomes mandatory.
We work with all the major accounting software packages and can connect directly to your existing setup. We’ll make sure it’s configured correctly for MTD and handle all the submissions for you.
VAT and MTD
If you’re VAT registered, you’re probably already using MTD for VAT –that became mandatory back in 2019 for most VAT-registered businesses.
The same principles apply to MTD for Income Tax, just with quarterly income and expense updates instead of VAT returns. If you’re already doing MTD for VAT, the transition to MTD for Income Tax will feel familiar.
Getting ready for MTD
Even if your deadline isn’t until 2027 or 2028, now is the time to start thinking about it.
The transition takes time, especially if you’re currently keeping paper records or basic spreadsheets. Getting set up early means you’re not rushing to comply when your deadline hits.
We can help you:
• Work out when you need to comply based on your income
• Choose the right software for your business
• Transition from your current record-keeping to digital systems
• Get comfortable with the new quarterly reporting cycle
• Understand what information you need to provide and when
What if you can’t use digital systems?
HMRC has exemptions for people who genuinely can’t use digital systems due to age, disability, location, or other valid reasons.
If you think you might qualify for an exemption, we can advise you on the criteria and help you apply if appropriate.
We'd love to talk
If you are frustrated by your current accountant, or are looking to appoint an accountant or bookkeeper for the first time, the first step is an informal chat.
We get to find out a bit about your business and what you need, and you get a feel if we are the right fit for you. It’s all about chemistry.
Give us a call on 01472 287387 or complete the form and we will give you a call back.
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