[BLOG] Making Tax Digital

If you’ve seen adverts or emails about Making Tax Digital (MTD) recently, you’re not alone. HMRC is talking a lot about it, and for good reason. Over the next couple of years, the way many people manage their taxes will change.

Here’s everything you need to know in plain English: what’s happening, who it affects, what you’ll need to do, and when.

What is Making Tax Digital?

Making Tax Digital is part of HMRC’s plan to modernise the UK tax system. It’s designed to make it easier for individuals and businesses to get their tax right by keeping records digitally and submitting information to HMRC more frequently through approved software.

In short, it’s the end of paper records and once-a-year tax returns and the start of a simpler, more accurate, digital approach to managing your tax.

Who does it affect?

The new rules mainly affect self-employed individuals and landlords who currently submit a Self Assessment tax return.

You’ll need to follow the Making Tax Digital rules if:

You’re registered for Self Assessment
You earn income from self-employment and/or property
Your combined income from those sources is above certain thresholds

Here’s how those thresholds break down:

From April 2026, if your qualifying income is over £50,000, you’ll need to join MTD for Income Tax.
From April 2027, it will apply to those earning over £30,000.
HMRC plans to extend this further in future, but if your income is £20,000 or less, you’re not yet required to join.

If you’re unsure whether this applies to you, don’t worry, we can help you check.

Why is this happening?

The idea is to make tax simpler, more accurate, and less stressful. By moving to digital record-keeping and quarterly updates, you’ll have a clearer view of your business finances throughout the year and fewer surprises at tax return time.

It’s also designed to reduce errors. HMRC estimates that avoidable mistakes cost billions every year, so by using digital tools, they’re hoping to make things more straightforward for everyone.

What do you need to do?

If you’re affected, here’s what you’ll need to do once MTD for Income Tax applies to you:

Keep digital records
You’ll need to record your income and expenses using compatible software rather than spreadsheets or paper notes.
Send quarterly updates to HMRC
Every three months, your software will send a summary of your income and expenses to HMRC.
Submit an end-of-year finalisation
You’ll still confirm your final figures each year (replacing your Self Assessment tax return), but the process will be smoother since most of the data will already be logged digitally.
Use HMRC-recognised software
There are lots of MTD-compatible options available and we can help you find one that fits your business and budget.
Get ready early
You don’t have to wait until the deadline to start. Moving to digital record-keeping now means you’ll be comfortable with the system when it becomes mandatory.

When does it start?

Here’s a quick summary of the rollout dates:

From 6 April 2026, MTD becomes mandatory for those with income over £50,000.
From 6 April 2027, it will include those with income over £30,000.

If you’re below those levels, there’s no action required just yet, but it’s worth understanding what’s coming so you can plan ahead.

What are the benefits?

We know that “new systems” can sound daunting, but there are plenty of positives:

Fewer mistakes - digital records mean fewer slip-ups.
More visibility - quarterly updates help you stay on top of your income and tax throughout the year.
Better cashflow planning - you’ll have a clearer idea of what you owe and when.
Less stress - no more year-end panic!

Many businesses that already use Making Tax Digital for VAT report that it saves them time and gives them greater peace of mind.

How we can help

If this all sounds a bit much, don’t worry. We’re here to guide you through it.
We can help you:

Check whether you’re affected and when you need to join
Choose and set up MTD-compatible software
Manage your digital record-keeping and quarterly updates
Make sure everything runs smoothly with HMRC

In summary

Making Tax Digital is coming, but there’s no need to panic. With the right support and the right systems in place, it’ll actually make managing your tax easier in the long run.

If you’re not sure where to start or want to know how this applies to your specific situation, get in touch with us today. We’ll help you get ready, stay compliant, and make the most of the digital future of tax.

Making Tax Digital: What’s Changing, Who It Affects, and What You Need to Do