What Is Making Tax Digital?
Making Tax Digital (MTD) is a long-term plan put in place by the government to modernise the tax system.
It will eventually require all businesses to keep digital records via MTD compatible and HMRC-approved software and then submit their figures every quarter.
Who Does Making Tax Digital for Income Tax Self Assessment Apply To?
MTD for Income Tax Self-Assessment (ITSA) affects sole traders and landlords, but the year this becomes mandatory for individuals depends on earnings, so you will be affected from:
- 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
Does MTD for ITSA Affect Limited Companies?
No. These new rules do not apply to limited companies because they deal with Corporation Tax instead of Income Tax.
However, VAT-registered limited companies will need to adhere to MTD for VAT.
What Are My MTD for ITSA Responsibilities?
- Keep digital records of your income and expenses using HMRC-compatible software.
- Submit quarterly updates to HMRC on: 7th August, 7th November, 7th February and 7th May.
- Complete a final end-of-year declaration.
What Digital Records Do I Need to Keep?
- Sales income
- Business expenses
- Rental income
- Invoices and receipts
Do I Need to Pay Every Time I Submit a Quarterly Update?
No. These quarterly updates do not trigger a payment each time – they just help to give you an idea of your tax bill as you go along.
Do I Still Need to Submit a Self Assessment Tax Return?
Yes. After your last quarterly update, you’ll need to do a final end-of-year declaration.
This essentially replaces the traditional self assessment tax return and is where everything is checked, corrected and finalised.
Do I Need Special Software for Making Tax Digital?
Yes. Due to HMRC’s MTD requirements, such as digital records, digital links and electronic submissions, the software you use must be MTD compatible and HMRC-approved.
What Happens if I Don’t Comply With Making Tax Digital Rules?
You could potentially face penalties for late submissions and late payments.
Can My Accountant Manage Making Tax Digital for Me?
Yes, an accountant can be a great asset and provide professional support and advice when it comes to managing your MTD obligations.
Making Tax Digital – How We Can Help You
At Dolan Accountancy, our package provides everything you need to meet your MTD requirements.
We can help to:
- Set up compliant digital bookkeeping through FreeAgent
- Manage your quarterly submissions
- Keep your records accurate and up to date
- Ensure 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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