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 means that, eventually, all businesses, sole traders and landlords will need to keep digital records via MTD compatible and HMRC-approved software, submitting their figures every quarter.
This will change the traditional annual self assessment tax return process.
How Will Making Tax Digital Change 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.
This should help both individuals and businesses to get their taxes right the first time and avoid making errors (that could lead to fines), as well as give them a progress ‘snapshot’ of their records to create an estimated tax bill as they go along.
The new system will require quarterly submissions that will be due on the following dates:
- 7th August
- 7th November
- 7th February
- 7th May
It’s important to note that these do not trigger payments – you will not be expected to make tax payments every quarter.
After your fourth quarterly update, you will need to complete a final end-of-year declaration. This essentially replaces the traditional self assessment tax return and is where everything is checked, corrected and finalised.
Making Tax Digital Thresholds
MTD for VAT is an already established part of Making Tax Digital that applies to all VAT-registered businesses above the VAT threshold (which is currently £90,000 taxable turnover – May 2026).
This was a phased rollout that took place over a few years, and the same process will apply to MTD for ITSA.
MTD for ITSA is based on gross income (not profit) and applies to sole traders and landlords – not limited companies, as they are responsible for Corporation Tax, not Income Tax.
As a sole trader or landlord, 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
What Are My Making Tax Digital 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.
The deadline date for a return, or end-of-year declaration, remains the same and is still due by the 31st of January following the end of the tax year.
How We Can Help You With Making Tax Digital
A good accountant will be able to give you expert advice and guidance on Making Tax Digital and will help to put your mind at ease if you’re unsure of how it all works.
At Dolan Accountancy, we can support you through every step of MTD, helping with 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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