Making Tax Digital (MTD): What it Means for You

In plain English, it means keeping your business records in digital form and sending updates to HMRC through approved software, rather than relying on manual processes and last‑minute paperwork.

For most people, the goal is simple: fewer errors, less stress at year end, and a clearer picture of what’s going on in your business as you go.

MTD already applies to all VAT registered businesses. VAT‑registered businesses must keep VAT records digitally and submit VAT Returns using MTD‑compatible software.

MTD for Income Tax (for sole traders and landlords) starts in phases.

·       If your gross income (so before expenses) from self‑employment and/or property is over £50,000, you’ll be required to use MTD for Income Tax from 6 April 2026.

·       HMRC’s current rollout plan then extends this to those over £30,000 from 6 April 2027, and over £20,000 from 6 April 2028.

If you’re in scope for MTD for Income Tax, you’ll keep digital records in compatible software (like Xero or Freeagent) and send HMRC quarterly updates (summaries) during the year, then confirm your final position as part of the usual annual process.

This doesn’t mean you suddenly pay your tax four times a year — it’s about reporting little-and-often, so you’re not scrambling at the deadline.

If you’ve received a letter from HMRC about MTD, please let us know as soon as possible. A letter usually means HMRC believes you’re likely to be in scope and is expecting you to prepare and comply by your start date.

What you must do to be compliant

If you’re in scope for MTD for Income Tax, compliance typically means:

• Sign up for MTD for Income Tax (HMRC won’t automatically sign everyone up; they contact you and you/your agent must complete the sign‑up). 

• Keep digital records of your self‑employment and/or property income and expenses using MTD‑compatible software.

• Send quarterly updates to HMRC for each self‑employment and property income source, using that software.

• Send an update even if there was no income/expense in the period (you still need to file the quarterly update).

• Do your year-end submission/finalisation through software (HMRC describes this as submitting your return/finalising your Income Tax position through the MTD process).

A helpful practical point: quarterly updates are based on totals from the digital records, and HMRC says you don’t need to make accounting/tax adjustments before sending the quarterly update (adjustments happen when finalising).

For taxpayers mandated from 6 April 2026, HMRC’s MTD campaign timeline lists:

• Start keeping records in MTD software: 6 April 2026

• First quarterly update deadline: 7 August 2026

(Then the next deadlines in that first year are 7 November 2026, 7 February 2027, and 7 May 2027.)

We’ll make this as smooth and practical as possible. We typically use FreeAgent or Xero to keep everything tidy, compliant, and easy for you to understand, and we’ll recommend the best setup based on how you run your business. (If you already use software, we can review what you have and make sure it’s MTD‑ready.)

Here’s what we can do for you:

• Confirm whether MTD applies to you and from which date (based on HMRC’s thresholds and your income sources)

• Get you set up on MTD‑compatible software and show you a simple “do this each week/month” routine

• Handle the quarterly submissions (or support you to do them confidently), and keep you on track throughout the year

If you’d like to understand what MTD means for you, or you’ve had anything from HMRC mentioning Making Tax Digital, just get in touch and forward the letter/email if you can. We’ll translate it into plain English, confirm what you need to do (and when), and put a plan in place so you’re fully covered.