Making Tax Digital
What is Making Tax Digital?
Making Tax Digital (MTD) is a government initiative designed to modernise the UK tax system by requiring businesses and individuals to keep digital records and submit tax information online. The goal is to make tax reporting more efficient, accurate, and easier to manage.
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​MTD applies to VAT-registered businesses and, from April 2026, will extend to self-employed individuals and landlords with an income above £50,000, followed by those earning over £30,000 from April 2027. Instead of filing an annual Self Assessment tax return, businesses will need to send regular updates to HMRC using MTD-compatible software, helping to reduce errors and simplify the tax process.
Making Tax Digital for Income Tax
Making Tax Digital for Income Tax (formerly known as MTD for Income Tax Self Assessment) is set to change how millions of business owners and landlords report their earnings to HMRC. The 2024 Autumn Budget confirmed that MTD for Income Tax will apply to all self-employed individuals and landlords with an income (not profit) of over £20,000 by the end of this parliament.
If you're self-employed or a landlord, you'll need to follow the Making Tax Digital (MTD) rules for Income Tax starting from:
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6 April 2026 – if your annual business or property income (turnover) is over £50,000
April 2027 – if your annual business or property income (turnover) is over £30,000
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When MTD starts in April 2026, the £50,000 turnover will be applied to the information in the 2024/25 tax returns due to be filed by 31 January 2026.
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If you meet the above criteria from 6 April 2026 you will need to:
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Keep records of your business income and expenses in a digital format.
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For each type of revenue (self-employed business or property), send quarterly updates of your business income and expenses to HMRC.
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Finalise your business income by submitting a final declaration.​
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How we can help you
Our MTD support is tailored for sole traders who don’t require full invoicing or payables management. As your business grows, you can seamlessly transition to our full accounting services and Xero subscription.
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For straightforward tax returns, our service covers all essentials. However, additional charges may apply for more complex tax situations, such as multiple income streams or pensions.
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Exclusive Discounts & Incentives:
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Early Adoption Discount – Sign up at least one year in advance and get 10% off
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Refer a Friend Incentive – Earn discounts when you recommend our services
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Existing Client Benefit – Our current clients can also access these discounts
To take advantage of these offers, adopt our MTD services by 31st October 2025.
We exclusively use Xero to ensure the best experience for our clients. This version of Xero is accessible only through your accounting partner.
What will I have to do under the new Making Tax Digital rules?
Keep digital records
With Making Tax Digital for Income Tax, you'll need to keep digital records of all your business income and expenses, including any earnings from self-employment or property. Getting started early is a great way to ensure you're prepared when the rules come into effect.
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You can use accounting software (e.g. Xero, FreeAgent) to keep your records digital. By setting up a bank feed, you can automatically pull in your transactions, making it easier to manage invoices, expenses, projects, and more - all in one place.
Send quarterly updates
Once you're signed up for Making Tax Digital for Income Tax, you'll need to submit a summary of your business income and expenses to HMRC every three months using MTD-compatible software. FreeAgent is one of the approved providers, so you can use it to stay compliant and submit your tax updates with ease.
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Quarterly submission deadlines are the same for everyone following MTD for Income Tax.
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Keeping on top of your records with digital software will make meeting these deadlines much simpler!
Finalise your business income
At the end of the tax year, you'll need to wrap things up by completing a final declaration, which takes the place of the current Self Assessment tax return.
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This is your chance to double-check that everything you've reported is correct, add any personal income or tax reliefs, and make any last-minute adjustments. Just like with Self Assessment, you'll need to submit your final declaration and pay any tax owed by 31st January of the following tax year.
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By keeping your records digital throughout the year, this process should be much smoother and stress-free!
The Benefits of Making Tax Digital
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