Making Tax Digital

Making Tax Digital is changing how sole traders and landlords report their income to HMRC.

It means keeping digital records and submitting updates throughout the year using approved software instead of filing just one annual tax return.

The aim is greater accuracy and fewer reporting errors. For many businesses, it also means a change in routine, which sounds scary, but we’re here to make that transition straightforward and as easy as possible.

If you’re not sure how and if Making Tax Digital affects your business, give us a call, or watch our mini-series on YouTube.

What Is Making Tax Digital?

Making Tax Digital, also known as MTD, is a government initiative designed to digitalise the UK tax system.

It replaces the traditional once-a-year Self Assessment return with:

• Digital record keeping using software approved by HMRC

• Quarterly updates submitted to HMRC

• An end-of-year final declaration

It changes how information is reported, not how tax is calculated.

Who Is It For And What Are The Key Deadlines?

Making Tax Digital will apply to sole traders and landlords.

• April 2026 – Applies to sole traders and landlords with income over £50,000

• April 2027 – Applies to those with income over £30,000

• April 2028 – Expected to apply to those with income over £20,000

The income threshold is based on the total amount you get paid by your customers before expenses, not your profit.

What’s Changing?

Currently, most people submit one tax return each year. Under MTD, you will:

• Keep digital records of income and expenses.

• Submit quarterly updates through compatible software

• Complete a final declaration at the end of the tax year

• What it does mean is keeping your records up to date throughout the year instead of once a year.

What MTD Means Day To Day

In practical terms, this means:

• Income and expenses must be recorded digitally using approved software

• Quarterly updates are sent to HMRC using approved software.

• Taking a photo of your receipts and uploading them to the digital software programme so you don’t have to keep them in a desk drawer or glove box.

• You’ll be able to send invoices from your phone while sitting in a customer’s driveway.

For many businesses, this is simply about creating a more regular routine around record keeping. With the right setup, it becomes part of normal business practice rather than a disruption, and you’ll have more control over the numbers.

Plus, a lot of the software will be able to send automatic payment reminders to customers, which means you are more likely to get paid on time instead of chasing late payments.

How AFor Can Support You

Whatever level of support you need, whether it’s just some friendly advice, help with the software set up or full support, we are more than happy to help. We will:

• Set you up with approved digital software. We use a programme called Xero.

• Provide guidance and support with using the software.

• Review and structure your digital records correctly.

• Handle your quarterly submissions.

• Complete your year-end final declaration.

• Keep you informed about deadlines and requirements.

If you’re currently using spreadsheets or paper records, we can help guide you or make the change to digital software for you, in a clear and straightforward way.

Our focus is simple. Keep you compliant. Keep you organised. Keep everything running smoothly so you don’t have sleepless nights.