What Is Making Tax Digital?
MTD will eventually require all businesses to keep digital records via compatible HMRC-approved software, submitting their figures every quarter.
The aim is to create a ‘trusted and modern’ tax system that will:
- Bring figures closer to real time.
- Make it easier for both individuals and businesses to get their taxes right and avoid making errors that could lead to fines.
- Make it possible for people to integrate tax management with a range of business processes via software.
- Contribute to wider productivity gains for businesses by encouraging digitalisation.
- Help to reduce the amount of tax lost to avoidable errors.
What Are the New Making Tax Digital Rules?
While MTD for VAT has been around for a few years, the most recent changes took effect on the 6th of April 2026.
MTD for ITSA responsibilities include:
- Keeping digital records of your income and expenses using HMRC-compatible software.
- Submitting quarterly updates to HMRC on: 7th August, 7th November, 7th February and 7th May. These do not trigger a payment each time; they just give you an estimated tax bill as you go along (these figures can be corrected later if needed).
- Completing a final end-of-year declaration – you’ll do this after your fourth quarterly update. This replaces the traditional self assessment return and is where everything is checked, corrected and finalised.
The year this becomes mandatory will depend on earnings, so if you’re a sole trader or landlord, you will be affected from the:
- 6th April 2026, if you have an annual business or property income of more than £50,000
- April 2027, if you have an annual business or property income of more than £30,000
- April 2028, if you have an annual business or property income of more than £20,000
Do I Need an Accountant if I’m using Making Tax Digital Software?
MTD software will not replace the need for an accountant because there’s only so much that software can do compared to human expertise.
Software can automate record-keeping and submission; however, it cannot:
- Interpret tax rules
- Optimise tax efficiency
- Identify mistakes
- Provide strategic advice
At Dolan, we also offer all of our clients free access to FreeAgent, as it provides everything you need to successfully meet your MTD obligations.
For example, FreeAgent:
- is fully MTD-compatible.
- automates a lot of admin burden thanks to its bank feeds, automated transaction categorisation, receipt capture, tax estimates, reminders and timelines.
- has quarterly submissions built into the workflow.
- is specifically designed for sole traders and landlords.
- simplifies the transition from self assessment.
How We Can Help You With Making Tax Digital
We can help with MTD tasks, such as:
- 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 includes everything you need and is just £25 +VAT per month.
If you’re an existing client, we charge an additional £10 + VAT per month to take care of your MTD needs.
If you have any further questions, our team of experts are available to answer any queries, so give us a call on 01442 795 100 or email jaime.thorpe@dolanaccountancy.com. Alternatively, contact us via live chat.
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