Tax & compliance
What is Making Tax Digital and does it affect me?
By Pick My Accountant Editorial · Updated 8 July 2026
What actually changes for you
Under MTD for Income Tax you keep records digitally as you go, send HMRC a summary every quarter through compatible software, and finish with a final declaration replacing the traditional self assessment return. The tax you pay doesn't change — the frequency and format of reporting does. Penalties move to a points-based system, so the cost of sloppiness compounds.
Who is caught and when
Check your combined gross self-employment and property income (turnover, not profit): over £50,000 means you join in April 2026; over £30,000 means April 2027. HMRC has signalled a £20,000 threshold to follow. Limited companies are not in MTD for Income Tax — corporation tax digitalisation is a later, separate phase. VAT-registered businesses of any size are already required to file VAT digitally.
How to prepare without drama
Pick MTD-compatible software early (Xero, QuickBooks, FreeAgent, Sage and others), get bank feeds flowing so records build themselves, and decide who presses the button each quarter — you or an accountant. Firms are pricing MTD into packages now; comparing before the 2026 rush gets better rates than calling in March 2026.
People also ask
Does MTD mean paying tax quarterly?
No — quarterly updates are information, not payments. Tax payment dates stay as they are (31 January and payments on account), though HMRC continues to consult on future changes.
What if I'm under the threshold?
You carry on with normal self assessment for now. You can join MTD voluntarily, which some people do to spread the record-keeping burden across the year.
Will my accountant handle MTD for me?
Yes — most firms offer packages covering software, quarterly submissions, and the final declaration. Expect sole trader packages to sit around £39–£89/month with MTD included; confirm the quarterly work is genuinely in scope.
This article is general information for UK businesses, not tax, legal, or financial advice, and thresholds change — confirm current rules on GOV.UK or with a qualified accountant before acting. Fee figures are indicative benchmarks from ourmethodology.