What is Making Tax Digital (MTD)?
Making Tax Digital (MTD) is a new system being introduced by HMRC to change how sole traders and landlords report their income. From April 2026, if your total income from self-employment and/or property in the previous (2024/25) tax year was over £50,000, you will need to follow the new rules. From April 2027 this threshold reduces to £30,000, and from April 2028 to £20,000.
What Does This Mean for Me?
If MTD applies to you, there are three main changes:
- You must keep digital records
Instead of paper records or spreadsheets alone, you’ll need to keep your income and expenses using compatible accounting software such as FreeAgent, Xero or QuickBooks. - You must submit updates every quarter
Rather than sending one tax return per year, you’ll send a summary of your income and expenses to HMRC every three months. These are simple updates, not final tax calculations. - You must complete an end-of-year declaration
At the end of the tax year, you’ll confirm your figures, make any necessary adjustments, and finalise your tax position.
Do I Need to Worry About This Now?
If your income is below £50,000, you don’t need to join MTD just yet — but it’s likely to affect more people over time. Getting used to digital record-keeping early can make the transition much easier.
What If I Don’t Use Accounting Software? You will need to move to HMRC-approved software if MTD applies to you. Don’t worry — this doesn’t have to be complicated. The right setup can be simple and easy to manage, even if you’re not particularly confident with technology.Not Sure Where to Start?
Making Tax Digital can feel like a big change, but you don’t have to deal with it alone.
We can help you:
- Choose and set up the right software
- Register for MTD with HMRC
- Keep your records in order
- Submit your quarterly updates and annual declaration
If you’re unsure whether MTD applies to you, or just want some straightforward advice, feel free to get in touch. We’ll be very happy to talk it through with you and help you decide the best approach for your situation.
How Much Will It Cost Me?
Whether you want to stay in control of your bookkeeping or prefer everything handled for you, we offer flexible options to suit your needs, from helping with initial set up only then you're responsible for keeping accurate up-to-date records and making submissions yourself, through to a fully managed option where we take care of all your bookkeeping and submissions, or our popular hybrid option where you do your own bookkeeping but we will review your records and submit them to HMRC for you every quarter.
Please note that if you sign up to MTD for the current 2026/27 tax year that will cover your 2026/27 end of year submission due on or before 31 January 2028 (replacing the old self assessment tax return), but you will still need to complete a tax return for the the previous 2025/26 tax year by 31 January 2027 as before!