Introduction
If you’ve heard the term “Making Tax Digital” (MTD) and felt a bit lost, you’re not alone. MTD is a government initiative aimed at modernising the tax system, making it easier for individuals and businesses to manage their taxes digitally. Let’s break it down into simple terms.
What is MTD?
Making tax digital (MTD) is a plan by HM Revenue and Customs (HMRC) to move tax records and submissions online. The goal is to reduce errors, improve efficiency, and make tax management more straightforward for everyone. Instead of keeping paper records and manually filling out tax forms, you’ll use digital tools to record and submit your tax information.
Who does It affect?
From April 2026 this will affect individuals with relevant income over £50,000. Relevant income is either turnover from a self-employed business or rental income as a landlord. If you have any of the sources of income above and together this exceeds £50,000, you will be affected. (Please note this is not profit but actual income received before deducting expenditure)
How does it work?
Here is a very broad overview of the steps you will need to take to comply
- Set up MTD compliant software
- Maintain digital records – this will involve recording all of your transactions digitally. Manual record keeping is no longer sufficient unless linked to MTD-compliant software
- Submit returns digitally every quarter using the software
- Submit your annual return as usual.
We’re here to help you
This is the 1st in a series of blogs that will provide more information on MTD including handy tips and advice to make this transition as smooth as possible.
If you want to talk through what Making Tax Digital (MTD) means for you please get in touch to chat with one of our MTD experts.
