Making Tax Digital (MTD) Setup & Support

What is Making Tax Digital?

Making Tax Digital (MTD) is HMRC’s long-running initiative to digitise the UK tax system. Instead of keeping manual records and typing figures into HMRC’s online forms once a year, businesses and individuals in scope must keep their records digitally and submit information to HMRC using MTD-compatible software. The aim is fewer errors, closer-to-real-time reporting and a more joined-up picture of your tax position. MTD is being rolled out in stages: it already applies to VAT, and it is now extending to Income Tax.

MTD for VAT — here now

Making Tax Digital for VAT applies to all VAT-registered businesses, regardless of turnover. If you are VAT-registered, you must keep digital VAT records and file your VAT returns through compatible software that connects to HMRC — you can no longer use the old manual online return. Records must be kept digitally with “digital links” between systems, so data flows electronically rather than being re-keyed. If you are still relying on spreadsheets, bridging software can keep you compliant, and we can advise on the best approach. For background, see our VAT registration guide.

MTD for Income Tax — from April 2026

The next major phase is Making Tax Digital for Income Tax Self Assessment, which affects self-employed people and landlords. It is being introduced according to qualifying income (your gross self-employment and property income before expenses):

From	Who is affected
April 2026	Sole traders & landlords with qualifying income over £50,000
April 2027	Sole traders & landlords with qualifying income over £30,000

The Government has also signalled that the threshold will fall further in future years, bringing more people into scope over time. Always check GOV.UK for the latest confirmed dates and thresholds, as the timetable has changed before.

What changes under MTD for Income Tax

If you are in scope, three things change. First, you must keep digital records of your business and property income and expenses. Second, you send HMRC a quarterly update summarising those figures — four times a year through compatible software. Third, after the tax year ends you submit a final declaration to confirm your figures, claim any reliefs and finalise your tax position. This replaces the single annual Self Assessment return with more frequent, lighter submissions, so staying organised throughout the year becomes essential.

Choosing compatible software

MTD requires software that can keep digital records and submit returns and updates directly to HMRC. Popular options include Xero, QuickBooks, FreeAgent and Sage, while bridging software can link existing spreadsheets to HMRC where appropriate. The right choice depends on your size, sector and how you like to work. We are software-agnostic: we recommend what genuinely fits your business rather than pushing a single product, and we set it up so it is accurate and compliant from the start.

Our Making Tax Digital service

We take the uncertainty out of MTD. Our service includes:

• Assessing whether and when MTD applies to you, and by which deadline.
• Recommending and setting up compatible software, and migrating your existing records.
• Training you on day-to-day digital record-keeping, or doing the bookkeeping for you.
• Preparing and submitting your quarterly updates and VAT returns.
• Completing your end-of-year final declaration and reviewing your overall tax.

Whether you want to hand the whole thing over or simply get set up correctly and run it yourself, we tailor the support to you. To understand the wider picture, read our blog on Making Tax Digital for small businesses, explore our full range of tax services including corporation tax, or learn about working with a local accountant in Reigate. You can also read HMRC’s official overview of Making Tax Digital for Income Tax.