With around 10 weeks to go until the start of the new tax year, many businesses are starting to prepare for the changes being introduced under Making Tax Digital (MTD). From April, sole traders and landlords with income exceeding £50,000 will be required to submit quarterly updates to HM Revenue & Customs (HMRC).

It is estimated that approximately 900,000 individuals will come within the scope of MTD in April. For those affected, this represents a significant change, and the sooner you begin preparing, the smoother the transition is likely to be.

Using approved software

MTD requires the use of compatible software. Whether you already keep your books digitally or are still using more traditional methods, it is essential to ensure that any accounting software you choose is approved by HMRC for MTD purposes.

Beyond compliance, using accounting software can offer a number of additional benefits. It can help streamline your bookkeeping, improve cash flow forecasting, support better financial decision-making and reduce the risk of errors. For this reason, when choosing software, it is worth considering the wider advantages it could bring to you and your business.

Registering for MTD

HMRC will contact you, based on your tax return information, to let you know that you need to prepare for Making Tax Digital. However, you will not be enrolled automatically. You must register yourself, and it is important to do so within the required timeframe.

Are there any exemptions?

There are certain automatic exemptions from MTD. For example, if you submit a tax return as a trustee or as a personal representative of a deceased taxpayer, you will not need to sign up. HMRC will usually notify you if you qualify for an automatic exemption.

In addition, there are circumstances where you may be able to apply for an exemption. It is therefore worthwhile checking whether your individual situation may allow you to do so.

What if your income is less than £50,000?

MTD is being introduced in stages. It will become mandatory for sole traders and landlords according to the following timetable:

  • 6 April 2026 – those with income above £50,000

  • 6 April 2027 – those with income above £30,000

  • 6 April 2028 – those with income above £20,000

If you wish, you can choose to sign up voluntarily ahead of these dates.

Does MTD apply to partnerships?

Not at present. However, HMRC has confirmed that business partnerships will be required to use MTD in the future. Further details and timescales will be announced at a later date.

Would you like help with MTD?

Selecting the right software can be confusing, but we can help by providing a tailored recommendation and any training you may need. We can also take care of your registration with HMRC on your behalf.

If you would like ongoing support with bookkeeping, submitting quarterly updates, or if you would prefer us to manage your end-of-year tax return, please get in touch. We would be delighted to help.