Tax & compliance
What is Making Tax Digital and does it affect me?
By Kaiser Khan · Updated 13 August 2026
What actually changes under Making Tax Digital?
You keep records digitally, send HMRC a summary every quarter through compatible software, and finish with a final declaration instead of one annual self assessment return. The tax you pay does not change — the frequency and format of reporting does. Penalties move to a points-based system.
Quarterly updates are information, not tax bills. Payment dates stay as they are unless HMRC changes them later. Spreadsheets alone will not comply unless bridging software links them to HMRC.
Who is caught by MTD, and when?
VAT-registered businesses are already in MTD for VAT. For Income Tax, combined gross self-employment and property income over £50,000 joins from April 2026; over £30,000 from April 2027; HMRC has signalled £20,000 later. Limited companies are not in MTD for Income Tax.
Measure turnover, not profit. HMRC confirmed it does not intend to introduce MTD for Corporation Tax. If you are under the Income Tax threshold you can join voluntarily; you do not have to.
How should I prepare for MTD without drama?
Pick MTD-compatible software early (Xero, QuickBooks, FreeAgent, Sage and others), turn on bank feeds, and decide who files each quarter — you or an accountant. Comparing packages before the 2026 rush is cheaper than calling in March.
Software is about £10–£20 a month when charged separately; many accountant packages include it. Confirm quarterly work is in the letter, not assumed.
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.