Making tax digital is a new HMRC initiative to streamline tax services, requiring sole traders and landlords to keep digital records and submit them quarterly to HMRC. You still submit and pay your full tax return at the same time as usual via the software, but in addition, you now have to submit quarterly information as well.
Who needs to sign up:
As mentioned this related to Sole Traders and Landlords. This will be done in stages with the first wave completed. It takes into account your Turnover in the business; this is the money you receive before any expenses go off but does exclude VAT and trade discounts.
The deadlines set are as follows:
+£50 000 - the deadline was 6th April 2026
+£30 000 - the deadline set is 6th April 2027
+£20 000 - the deadline is set for 6th April 2028
If you are already on compatible bookkeeping software and keep your books up to date, this will be a fairly simple process. The important thing is to register early enough so that all you need to do is sign in via the portal on your software and submit when the submission date is due.
Submission dates:
Quarter 1: April - June to be submitted by 7th August
Quarter 2: July - September to be submitted by 7th November
Full Tax Return for the previous financial year due by 31st January
Quarter 3: October - December to be submitted by 7th February
Quarter 4: January - March to be submitted by 7th May
If you are not using compatible software, haven't registered and/or don't keep your books up to date, this will be a bigger change for you.
We have been helping some of our clients get up to date and it's easier than you think but does take a little work. You can do it yourself or as our clients have done, employ a Tax Agent. This sounds fancy but essentially just a Bookkeeper or Accountant who has registered with HMRC for providing this support.
To do it yourself, all you need to do is:
Register with HMRC for Making Tax Digital
Research and acquire compatible MTD software (examples are Quickbooks, Xero, etc)Research and acquire compatible MTD software (examples are Quickbooks, Xero, etc)
Set-up and get the information up to date by the submission date - ie: ensure that 7April to 6 June is captured and reconciled (balances) by the submission date of the latest 7th November.
Connect the software to your MTD portal
Submit your quarterly updates on time
Complete the usual tax return by 31st January (as far as we are aware last years can be submitted outside of the system but after submitting 4 quarterly updates the final should also be done through the system
HMRC will use the information to prepare your tax bill
Essentially the goal is that you will be updating little and frequently rather than end of year which will hopefully help make things a little more streamlined with tax submissions...
If you are a Sole Trader and need some help. Do reach out; we would love to help you get MTD compliant.