Making Tax Digital: What Small Business Owners Need to Know

What is Making Tax Digital?

Making Tax Digital (MTD) is HMRC's programme to modernise the UK tax system. The aim is to move tax records and submissions to digital platforms, reducing errors and making it easier for businesses to stay on top of their tax obligations.

VAT — Already Mandated

MTD for VAT has been mandatory for all VAT-registered businesses since April 2022. If you are VAT-registered, you must already be using MTD-compatible software to submit your returns.

Income Tax — Coming in 2026

MTD for Income Tax Self Assessment (MTD for ITSA) will become mandatory for sole traders and landlords with qualifying income above £50,000 from April 2026, with a lower threshold of £30,000 following in 2027.

What You Need to Do

• Keep digital records of income and expenses throughout the year
• Use MTD-compatible accounting software
• Submit quarterly updates to HMRC
• File an end-of-period statement and final declaration annually

If you are unsure whether MTD applies to your situation, our accounting team can assess your position and help you prepare.