Making Tax Digital
- stacyh23028
- May 16
- 3 min read
Updated: Jun 27
What is Making Tax Digital?
Making Tax Digital (MTD) is a UK government initiative aimed at transforming the tax system by requiring businesses and individuals to maintain digital records and submit tax information to HM Revenue and Customs (HMRC) using compatible software. This initiative is designed to streamline tax reporting, improve accuracy, and reduce the administrative burden on taxpayers. MTD for VAT was successfully rolled out with all VAT-registered businesses complying with MTD for VAT. MTD for Income Tax Self Assessment will be introduced from 6th April 2026.
What Does this Mean?
As I said above, if you are VAT-registered then you are already complying with MTD for VAT returns.
However, for Self Assessments, qualifying businesses will change the way they submit Self Assessment Tax Returns. There are several key changes you need to be aware of:
Digital record keeping: You will need to keep digital records of your income and expenditure using MTD compatible accounting software
Quarterly updates: Instead of filing one annual tax return, you will need to submit quarterly returns to HMRC giving information regarding your income and expenses for the quarter. You will not need to pay tax at this stage
End of period statement (EOPS): At the end of the tax year, you will need to submit an End of Period Statement to finalise your business income and expense. This will include making any necessary adjustments for the year
Final declaration: After you submit your EOPS, you will submit a final declaration which will be similar to the current Self Assessment Tax Return. This will confirm your total income, accounting for other income sources and calculate your tax liability. The deadline for paying your tax liability will remain the same - by midnight of the 31st January following the end of the tax year to which it relates
Deadlines
Quarterly updates are due:
5th August
5th November
5th January
5th May
EOPS and Final Declaration are due:
by 31st January following the end of the tax year
Does MTD Affect Me?
If you are currently VAT registered then you are already complying with MTD for VAT.
However, for Income Tax Self Assessments (ITSA). From April 2026, MTD for ITSA is being introduced in phases based on income thresholds.
From 6th April 2026 - Sole traders and landlords with an annual turnover (income) over £50,000 must comply
From 6th April 2027 - The threshold reduces to £30,000 for sole traders and landlords
From 6th April 2028 - The threshold reduces even further to £20,000
Turnover (Income) is based on gross trading/property income (before expenses or deductions)
How Abbey Bookkeeping Solutions is dealing with the changes:
At Abbey Bookkeeping Solutions, I’m a Xero Certified Advisor, which means I use Xero—a cloud-based, HMRC-approved accounting system that’s fully compatible with Making Tax Digital (MTD). By specialising exclusively in Xero, I’ve built a deep level of expertise with the software, allowing me to use it efficiently and effectively to support your business needs. My experience ensures you get the most out of the platform, with accurate, streamlined bookkeeping and full MTD compliance.
I’ve chosen to make 2025 a “training year” for my clients, focusing on education and support around the upcoming MTD changes. This year is all about helping clients get familiar with the new process and the software—without the pressure of immediate compliance. By the time the mandatory deadlines arrive, you’ll feel confident and fully prepared to meet the requirements with ease.
MTD might seem overwhelming and daunting, but it doesn’t have to be. With the right support and guidance, the transition can be smooth and manageable.
If you’d like to find out whether your business will be affected or you want to know more information, feel free to get in touch—I’m here to help.
07352 454764
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