Making Tax Digital (MTD)

When does Making Tax Digital apply to me?

MTD for VAT is already live for VAT-registered businesses. MTD for Income Tax starts at £50,000 qualifying income from 6 April 2026, then £30,000 in 2027 and £20,000 in 2028. Confirm current thresholds on GOV.UK before you act — our dates are from the 17 July 2026 review.

Sole traders and landlords are the Income Tax cohort. Limited companies keep filing corporation tax as now. An accountant who cannot name their MTD software is not ready.

Do I need an MTD-ready accountant?

If you are VAT-registered you should already be filing through MTD-compatible software. Sole traders and landlords with qualifying income over £50,000 join MTD for Income Tax from 6 April 2026, so your accountant must handle quarterly updates as well as the year-end declaration.

Software is about £10–£20 a month when charged separately; many packages include it. Confirm quarterly work is in the engagement letter. Spreadsheets alone will not comply unless bridging software links them to HMRC.

Is MTD for Corporation Tax happening?

No. HMRC confirmed in its July 2025 Transformation Roadmap that it does not intend to introduce MTD for Corporation Tax. Companies continue to file CT600 returns as they do today.

Do not pay extra for a “company MTD” product that does not exist. Limited companies can still need MTD-ready firms for VAT if they are VAT-registered.

What software do I need for Making Tax Digital?

You need HMRC-recognised MTD-compatible software — packages such as Xero, QuickBooks, FreeAgent or Sage — or bridging software that links spreadsheets to HMRC. Many MTD-ready accountants include the subscription in the monthly fee.

Ask which product they use and who submits each quarter. Pick software before the 2026 rush if you are in the first Income Tax cohort. Confirm current rules on GOV.UK.

What income counts toward the £50,000 MTD threshold?

HMRC uses qualifying income, not profit, for the Income Tax timetable. Combined self-employment and property income is the usual test for people with both. Confirm the current definition on GOV.UK — it is the detail that catches people out.

A high-turnover, low-profit sole trader can still be in. A landlord with one property over the line is in. See our dedicated answer on what income counts if your facts are messy.

How much does MTD-ready support cost?

When charged separately, MTD software and quarterly filing support typically runs £10–£20 a month on our editorial benchmarks. Many sole-trader and VAT packages already include it. A January-only accountant who adds quarterly work will cost more than a firm that priced it in.

Compare the whole monthly number, not the MTD line in isolation. Bridging software for spreadsheets is a product; an accountant who will operate it is a different product.

What happens if I ignore MTD?

VAT-registered businesses that do not file through compatible software are already outside the rules. Income Tax MTD penalties follow HMRC's points-based regime once your cohort is live. Waiting until April 2026 to pick software is how people buy a messy first quarter.

We are not HMRC. Confirm current penalty rules on GOV.UK. An accountant cannot file MTD on paper for you.

How should I choose an MTD-ready accountant?

Ask which HMRC-recognised software they use, who submits each quarter, and whether that work is in the monthly fee. Then check ICAEW, ACCA, AAT or ICAS. Skip anyone who still talks about posting a paper VAT return.

Online firms are often further along on software. Local firms can be equally ready. Three quotes that name the product are enough.

1. Check whether VAT MTD already applies to you
2. Check the Income Tax threshold and date for your income
3. Name the software on every quote
4. Get quarterly updates written into the letter before April 2026