Making Tax Digital
Heard a lot about Making Tax Digital? Us too! It has been a long while coming, but we’re here to support you now that the time has come to actually make some changes if you need to!
So, what is Making Tax Digital for Income Tax (MTD ITSA)?
Making Tax Digital is a change to the details filed with HMRC for those tax payers in the self assessment system, and a change to the frequency of filings with HMRC. Essentially adding quarterly reporting, like with the majority of VAT returns, to the annual year end tax return process.
Who does it apply to?
From 5 April 2026 MTD applies to those with qualifying income in excess of £50,000 per year.
What do you mean by qualifying income?
Qualifying income covers all self employment income, along with rental income - that’s on a gross basis so just the income before taking account of your costs - even if you have income of £52,000 and costs of £45,000 you would still be liable to file under MTD.
What do I need to do?
In essence the requirements are to submit your income and expenses for your income sources each quarter, using some MTD compliant software, before capturing year end adjustments and correcting any mistakes in a final submission at the end to calculate your tax liabilities.
How can you help me?
Various ways! We have the following solutions available for clients:
1 - Checking at the year end and filing the final returns, essentially just like a tax return if you are happy to do your own filing;
2 - Checking and submitting the quarterly returns along with the final year end submission; or
3 - Completing your bookkeeping on a monthly basis along with the details in point 2 above.
Along with this we can also advise on the right software options for your circumstances as well.
How much is this all going to cost?
Well this is a difficult one - option 1, in terms of our costs should be pretty similar to the current cost, albeit there is likely to be a software cost as well. Option 2, again shouldn’t be too expensive provided that the information that you are keeping is pretty accurate! Option 3 will depend on the volume of transactions and how much work is involved but we’re happy to have a chat about the costs involved and tailor a price accordingly.
Whats in it for me?
Probably the major benefits of better record keeping, using some appropriate software is the timeliness of information that you will have at your finger tips - this then leads to being able to make better financial decisions, in conjunction with working with us. It can also give you peace of mind as to your potential tax liabilities and give us a chance to know in advance if there are any clever tips we can make, such as pension contributions for instance, before the tax year has ended - being ahead of the game will likely cover the cost of our help in getting the submissions made!
So it’s not really a tax thing?
Not really - the majority of the work here is from a record keeping perspective, so this will be handled by our bookkeeping team with a little help from the tax department!
What do I need to do next?
Reach out and have a chat - we can help to ensure that from April 2026 you are on the right path. Whilst there will no doubt be some challenges (everyone submitting all of the first quarter returns at the same time will no doubt be quite a feat!) we will do our very best to look after you through the transition to MTD!