Making Tax Digital (MTD) for the Self-Employed: Everything You Need to Know

4 days ago
3 min read

Are you self-employed or a landlord in the UK? Significant changes to the way you report your income to HMRC are on the horizon. Making Tax Digital (MTD) for Income Tax Self Assessment (ITSA) is the Government’s plan to modernise the tax system, and it’s important to understand how it affects you.

In this guide, we break down what MTD is, who it applies to, and the key dates you need to mark in your calendar.

Watch: A 5-Minute Guide to Making Tax Digital

https://www.youtube.com/watch?v=A-kpBoGl5lM

What is Making Tax Digital (MTD)?

MTD is a HMRC initiative designed to make tax administration more efficient and accurate. Instead of filing a single annual tax return, those affected will be required to:

Keep digital records of all business transactions.
Use MTD-compatible software to send quarterly updates to HMRC.
Submit a final declaration at the end of the tax year.

The goal is to reduce errors and help business owners stay on top of their finances in real-time.

Who Does MTD Apply To? (Key Thresholds)

The requirement to join MTD depends on your "qualifying income" - this is your total gross income (before expenses) from self-employment and property.

Income over £50,000: You must comply from 6th April 2026.
Income over £30,000: You must comply from 6th April 2027.
Income over £20,000: You must comply from 6th April 2028.

Important Deadlines: Quarterly Updates

Under MTD, you won't pay tax four times a year, but you will need to provide updates. The quarterly deadlines for these updates are:

7th August
7th November
7th February
7th May

Note: The final payment deadline remains the 31st of January, just as it is now.

The Risks of Not Being Prepared

Waiting until the last minute can lead to unnecessary stress and financial risk. Failing to prepare for MTD could result in:

HMRC Penalties: Late or inaccurate digital submissions may incur fines.
Software Setup Issues: Integrating new software into your business takes time.
Increased Stress: Transitioning your entire accounting process overnight is a recipe for errors.

Your 3-Step MTD Checklist

At Wright & Co., we want to make this transition as seamless as possible. Follow these three steps to get started:

Identify Your Start Date: Review your gross income to see which deadline applies to you.
Choose Compatible Software: Not all accounting software is MTD-ready. Speak to us for professional guidance on which tools best suit your business needs.
Create a Tailored Plan: Work with us to digitise your records now so you are ready well before the deadline.

Stay Vigilant Against Scams

As tax rules change, fraudsters often increase their activity. Remember: HMRC will never threaten arrest or ask for payments via voicemail or text. If you are ever unsure about a communication you’ve received, contact your accountant first.

How Wright & Co. Can Help

We are experts in Making Tax Digital. Whether you need help checking if you are affected or require a full software setup and training, our team is here to guide you through every step.

Don’t wait - start your digital journey today.

Call us: 0121 556 1072
Email us: info@wright-co.com
Visit us: www.wright-co.com

Need Help ?

Please contact us if we can help you with these or any other tax or accounts matters.

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Disclaimer: The information contained in this newsletter is of a general nature and no assurance of accuracy can be given. It is not a substitute for specific professional advice in your own circumstances. No action should be taken without consulting the detailed legislation or seeking professional advice. Therefore no responsibility for loss occasioned by any person acting or refraining from action as a consequence of the material can be accepted by the authors or the firm.