Making Tax Digital

Making Tax Digital (MTD) is a government initiative designed to make the UK tax system easier, faster and more accurate by requiring individuals and businesses to keep digital records and submit tax returns online.

If you’re a sole trader, landlord, or small business owner, MTD means you’ll eventually need to use compatible software to manage your tax records and send updates to HMRC every quarter, rather than just once a year.

MTD is being introduced in phases, starting with VAT, followed by Income Tax and eventually Corporation Tax.

Book a consultation today if you want to learn how Making Tax Digital impacts your bsuiness.

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Making Tax Digital: The essential guide

Who needs to comply – and when?

Making Tax Digital currently applies to VAT-registered businesses, but it’s being extended to cover Income Tax for self-employed individuals and landlords.

MTD has been introduced gradually since 2019. Here are the major milestones so far:

  • April 2019 – MTD became mandatory for VAT-registered businesses with taxable turnover above the VAT threshold (£85,000)
  • April 2021 – Requirement extended to include digital links between software and HMRC submissions
  • April 2022 – MTD for VAT applied to all VAT-registered businesses, regardless of turnover

If you earn income through self-employment or property, you’ll need to follow MTD rules depending on your annual income:

  • From April 2026 – If your total annual income is over £50,000
  • From April 2027 – If your total annual income is over £30,000
  • From April 2028 – If your total annual income is over £20,000

Qualifying income includes gross income from self-employment and property before any tax allowances or expenses are deducted.

To be ready, you’ll need to:

  • Keep digital records of your income and expenses
  • Use HMRC-recognised software
  • Send quarterly updates and an end-of-year final declaration to HMRC

For a full step-by-step overview of what’s required, HMRC provides a helpful breakdown here: Making Tax Digital for Income Tax – Step by Step Guide

How will MTD help me?

Making Tax Digital isn’t just about meeting new rules — it can actually make managing your tax simpler, faster, and less stressful.
Here are a few ways it can help:

Less paperwork

Say goodbye to piles of receipts and manual spreadsheets. MTD encourages cleaner, more consistent digital records.

Fewer mistakes

Using approved software reduces the risk of common errors, which can help you avoid penalties or missed deadlines. An independent report published in 2021 found 67% of businesses reported that MTD reduced the potential for mistakes in their record keeping.

More time to focus on your business:

With quarterly updates and streamlined processes, you’ll spend less time on tax admin and more time running your business.

Better financial visibility

Many MTD-compatible tools offer real-time insights, so you can see how your business is performing at any point in the year.

Peace of mind

Staying ahead of tax deadlines and knowing your records are HMRC-compliant gives you confidence and security.

How Cutter & Co can help

Whether you’re a sole trader, landlord, or small business owner, Making Tax Digital doesn’t have to be overwhelming — and you don’t have to do it alone.

At Cutter & Co, we can guide you through every step of the MTD process, making sure you’re compliant, confident, and ready well before the rules apply to you.

We can help you:

  • Understand your responsibilities under MTD and how they apply to your situation
  • Choose and set up HMRC-recognised software such as Sage, QuickBooks, Xero or KashFlow
  • Keep your digital records organised and secure
  • Submit your quarterly updates and end-of-year returns accurately and on time
  • Plan ahead so MTD becomes part of your routine, not a last-minute worry

Ready to get started, or want to find out more about Making Tax Digital? Book a consultation today.

Book a free consultation

Making Tax Digital FAQs

From April 2026, if your total self-employment and property income is over £50,000.

From April 2027, if your total self-employment and property income is over £30,000.

From April 2028, if your total self-employment and property income is over £20,000.

Yes. If your property income pushes your total income over £50,000 from April 2026, over £30,000 in April 2027 , and over £20,000 in April 20208, you’ll need to follow MTD rules.

Your income from both sources is added together. If the combined total is over £50,000 from April 2026, or £30,000 from 2027, or over £20,000 from April 20208, you’ll need to comply with MTD for Income Tax.

You can use spreadsheets, but they must be linked to HMRC-recognised software to submit your data digitally. Manual entry is no longer allowed for MTD submissions.

You’ll need HMRC-recognised software such as Xero, Sage, QuickBooks, or KashFlow. HMRC have a list of commercial software that works with Making Tax Digital. Cutter & Co can also help you choose and set it up.

If your income is over £50,000, you'll start submitting quarterly updates from April 2026. If your income is over £30,000, the start date is April 2027. If your income is over £20,000, the start date is April 2028.

Yes — but instead of one big return at the end of the year, you'll submit quarterly updates and then a final end-of-year declaration via MTD-compatible software.

You could face penalties or fines for non-compliance. HMRC plans to introduce a points-based penalty system for late submissions under MTD.

We’ll explain what MTD means for you, recommend the right software, help you get set up, and take care of submissions — so you can stay compliant without the stress. You can contact us to book a consultation. 

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