Making Tax Digital – We’re ready, are you?
Making Tax Digital (MTD) is no longer just a passing comment or consideration of HMRC’s. It’s imminent, and now is the perfect time to ensure we’re all ready.
In this blog we explore what MTD actually is, how SG Accounting are preparing for the upcoming changes, and how we can help you.
What is Making Tax Digital?
Making Tax Digital (MTD) is a central part of the government’s Tax Administration Strategy, designed to modernise the UK tax system. Its aim is to reduce the tax gap by requiring businesses and individuals to:
- Keep digital records
- Use compatible software to manage their tax affairs
- Submit quarterly updates, bringing the tax process closer to real-time
Making Tax Digital for Income Tax
MTD for VAT was introduced on 1 April 2019 for VAT-registered businesses to improve the accuracy of tax reporting, reduce human errors, and modernise the UK tax system. HMRC aimed to create a more efficient and transparent system that makes it easier for businesses to get their taxes right. This initiative has now been extended to MTD for Income Tax from 6 April 2026.
What’s happening and when?
HMRC will soon start communicating with affected taxpayers about the upcoming changes.
Here’s what you need to know:
April 2025: Sole traders and landlords with relevant income can voluntarily start providing updates and implementing digital processes ahead of the mandatory deadline.
We will be inviting a cross-section of clients to be part of this beta testing and helping us to navigate the new legislation.
April 2026: MTD becomes mandatory if you are self-employed or a landlord and have an annual business or property income of more than £50,000
April 2027: The threshold lowers to £30,000.
It is expected that around 780,000 people with business or property income over £50,000 will join the MTD for ITSA service from April 2026, with a further 970,000 joining from April 2027.
How will this affect you?
- Digital Record-Keeping
You will need to keep financial records digitally using MTD-compatible software. This means moving away from manual spreadsheets or paper records.
- More Frequent Submissions
Instead of submitting just one annual self-assessment tax return to declare your year’s income and expenses, you will also need to submit quarterly updates to HMRC. This means you will need to stay on top of your bookkeeping more regularly throughout the year.
- Compliance requirements
MTD introduces more stringent compliance rules, including digital links between systems. You will no longer be able to copy and paste figures between spreadsheets and instead need the appropriate systems in place that talk to each other in a compliant way.
How we can help you
As we move through the testing phase and up until April 2026, we’re continuing to build our expertise around the new legislation. As your trusted accountants, we’re still here to support you every step of the way with Making Tax Digital. We understand that adapting to new digital tax requirements can feel overwhelming, but our priority is to make the transition as smooth and stress-free as possible.
Whether you need help choosing the right software, understanding submission deadlines, or ensuring your records meet HMRC’s standards, your SG Client Director is here to provide expert guidance and practical solutions tailored to your business.
Let us take the complexity out of MTD so you can focus on what you do best – running your business. Get in touch if you have any questions, or want to discuss MTD in greater detail.
Note: All the information and advice in this blog post was correct at the time of writing.
