What is Making Tax Digital (MTD)
Making Tax Digital (MTD) has been introduced by the Government to modernise the UK tax system. Instead of one annual self-assessment tax return, those affected will need to keep digital records and submit updates to HMRC using approved software every quarter. You will also need to submit a final declaration, in place of the annual self-assessment tax return.
Who MTD Applies To
From April 2026
MTD for Income Tax will apply to:
- Sole traders with annual business income over £50,000
- Landlords with property income over £50,000
- Anyone whose combined self-employment and property income exceeds £50,000
From April 2027
The threshold reduces to £30,000.
MTD does not currently apply to:
- Limited companies
- Partnerships
What You’ll Need to Do Under MTD
If MTD applies to you, you’ll need to:
- Keep digital records of your income and expenses
- Use HMRC-compatible software
- Submit quarterly updates to HMRC
- Complete a final end-of-year declaration
Important:
Your tax payment dates do not change — only how often you report your figures.
How Quarterly Updates Fit With Your End-of-Year Tax Return
MTD introduces four simple quarterly updates, but these do not replace your end-of-year tax return. Instead, they help HMRC stay up to date throughout the year.
1. Quarterly updates: quick check-ins
Every three months, your Government approved software sends HMRC a summary of your income and expenses so far.
These updates:
- Are based on the digital records you already keep
- Don’t require tax adjustments
- Can be corrected later
- Give you an estimated tax bill as you go
Think of them as progress snapshots rather than full tax returns.
2. End-of-year: your final tax return
After your fourth quarterly update, you’ll complete a Final Declaration (this replaces the traditional Self-Assessment return for those in MTD).
This final step includes:
- All income and expenses already reported
- Any adjustments (e.g., private use, capital allowances)
- Any other income not included in quarterly updates (savings, dividends, pensions, employment)
- Any allowances or reliefs you want to claim
This is where everything is checked, corrected, and finalised.
3. Deadlines stay the same
Your final submission is still due by:
31 January following the end of the tax year.
4. Quarterly updates don’t mean quarterly tax payments
You’ll still pay tax in the usual way:
- Balancing payment in January
- Payments on account (if applicable)
Quarterly updates are reporting only — they don’t trigger payments.
How Dolan Accountancy Can Help
We support clients through every step of MTD, including:
- Setting up compliant digital bookkeeping through FreeAgent
- Managing your quarterly submissions
- Keeping your records accurate and up to date
- Ensuring you stay fully compliant and stress-free
Our MTD package is just £25 + VAT per month and includes everything you need. If you are an existing client, we can handle your MTD needs for just an additional £10 + VAT per month.
If you’re unsure whether MTD applies to you, or you’d like help preparing, our expert team is here to guide you.
Why Thousands of Contractors, Small Businesses and the Self-Employed Choose Dolan Accountancy
With over 30 years’ experience, Dolan Accountancy are award-winning nationwide accountants for contractors, small businesses and the self-employed. We have the specialist skills, reputation, and credibility you can trust.
Our all-inclusive packages cover everything you need, with no hidden costs.
If you’d like to find out more about how Dolan Accountancy can help you and your business, please give us a call on 01442 795 100 or email sophie.lewis@dolanaccountancy.com or jaime.thorpe@dolanaccountancy.com.
We don’t believe in tiered packages or hidden extra fees, instead we aim to give you everything you need, including:
- Free Company Formation – This is where it all begins. Once you have decided on an available name, we will form your company free of charge (if using our accountancy services) and it will be ready for you to use in as little as three hours.
- A Dedicated Accountant – Your accountant will be there for any company or personal tax advice that you require.
- Free Access to FreeAgent – We offer all of our clients access to FreeAgent, free of charge.
- Free Business Banking – We are partnered with multiple banking providers, several of which provide free business banking for the first 12 months.
- Free Registered and Director’s Service Office Address – Sometimes you just don’t want your home address on display at Companies House. When you sign up to our accountancy services, we will offer the use of our address as an alternative.
- Your Business and Personal Taxation Needs – This includes Company Accounts, Director’s Personal Tax Return, VAT Returns, Payroll, Corporation Tax, unlimited IR35 status reviews and Dividend advice, to name just a few.
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