Making Tax Digital: what it means for your business
Making Tax Digital is HMRC's long-running programme to move tax record-keeping and filing into software. For VAT it is old news; for Income Tax it is arriving in stages, and the businesses that prepare early find it a non-event.
Where MTD already applies
All VAT-registered businesses have been required to keep digital records and file VAT returns through MTD-compatible software for several years. If your VAT returns are filed from Xero, QuickBooks or Sage, you are already complying, whether or not anyone ever said the words "Making Tax Digital" to you.
MTD for Income Tax: the rollout
The same regime is extending to Self Assessment. Sole traders and landlords are being brought in by income level in phases. Those with qualifying income over £50,000 have been in since April 2026, those over £30,000 join from April 2027, and those over £20,000 from April 2028. Those within it keep digital records and send quarterly updates to HMRC through software, with a final declaration replacing the traditional annual return. We walk through the quarterly cycle in MTD for Income Tax, quarter by quarter. Because the thresholds and timings have moved before, check the current position on GOV.UK or ask us where you stand.
What "digital records" actually means
It does not mean scanning paper into a folder. It means each transaction recorded in software or a compliant spreadsheet setup, flowing through to HMRC submissions without retyping. In practice, a cloud accounting platform with a bank feed satisfies it as a by-product of ordinary good bookkeeping.
How to be ready without drama
Businesses that struggle with MTD deadlines are almost always struggling with bookkeeping, not technology. Records kept current each month make quarterly updates a button press. If you are still on paper or spreadsheets and MTD for Income Tax will catch you, moving to cloud accounting a year early turns a forced change into a comfortable one.
This note is general guidance and the MTD timetable has shifted before; check the current position for your own situation. To get your records MTD-ready, talk to us.
Last reviewed 7 October 2026.