What Is Making Tax Digital?
Making Tax Digital is a key part of the government’s tax administration strategy – a 10-year plan with the aim of building a ‘trusted and modern’ tax system.
Eventually, all businesses, sole traders and landlords will need to keep digital records via MTD compatible HMRC-approved software and submit their figures every quarter.
Who Is Affected by Making Tax Digital?
It is only sole traders and landlords who are affected by MTD for ITSA, and the year that they need to implement these changes will depend on their earnings.
For example, 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
Making Tax Digital Responsibilities
- Keeping digital records of your income and expenses using HMRC-compatible software.
- Submitting quarterly updates to HMRC.
- Completing a final end-of-year declaration.
How Do Quarterly Updates Work with Self Assessment?
MTD for ITSA will bring the tax system closer to real time, replacing the annual self assessment with digital record keeping maintained throughout the year.
These quarterly updates will be due on the:
- 7th August
- 7th November
- 7th February
- 7th May
These do not trigger payments – they are not full tax returns, and you will not be expected to pay each one.
They are simply summaries of your records that will give you an estimated bill as you go along and can be corrected later on if needed.
After your fourth quarterly update, you will need to complete a final end-of-year declaration. This is where everything is checked, corrected and finalised.
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.
The best MTD software includes the following features:
- Quarterly MTD submissions
- Bank feeds
- Receipt capture
- Accountant access
- VAT support
- Mobile app access
Quarterly Updates: Challenges and Benefits
As with any change, there will be challenges at first as people get used to the new quarterly update process.
Typical challenges include things like:
- Increased admin.
- Poor bookkeeping habits will become more visible – if you’re the type of person who leaves things to the last minute, then this could potentially create more issues for you. This new system will mean being more organised throughout the year if you’re not usually.
There are also benefits to submitting updates regularly, such as:
- Having more up-to-date financial visibility.
- An earlier awareness of tax liabilities.
All of this will give you greater control over your finances.
How We Can Help You With Making Tax Digital
At Dolan Accountancy, we can provide the right MTD support you need to meet your obligations, including helping to manage your quarterly submissions.
We can also help with:
- Setting up compliant digital bookkeeping through FreeAgent
- 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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