MAKING TAX DIGITAL
- Is it really a nightmare?
- Is it needed?
- As if the average consultant does not already have enough passwords with HMRC.
- The average consultant isn’t that busy.
- MTD will benefit the consultant.
- The consultant is happy paying higher Accountant fees.
This is what some of our self-employed consultants told us.
- “What’s that?”
- “I thought you my accountant dealt with all that.”
- “Please don’t tell me HMRC have invented another login.”
Unfortunately, the answers to most of points 1 to 7 is mainly negative from our clients
So, what actually is Making Tax Digital?
In simple terms, HMRC wants to modernise the tax system but by doing so it creates a great deal of additional work for the self-employed. So instead of waiting until after the end of the tax year to submit one annual Self-Assessment tax return, many taxpayers will now need to keep digital records and submit 4 updates to HMRC throughout the year. And then a final declaration.
The rules
- From 6 April 2026, if your combined income from self-employment and/or property is more than £50,000 a year, you’ll need to join MTD.
- From 6 April 2027, the threshold drops to £30,000.
- From 6 April 2028 the threshold is £20,000.
What changes?
Instead of simply handing your accountant a carrier bag full of receipts or emailing every January you’ll need to:
- Keep digital records.
- Use compatible software.
- Submit quarterly updates to HMRC.
- Submit a final declaration after the end of the tax year.
The quarterly submissions are not four tax returns they are just progress updates and you won’t pay tax four times a year because of MTD. The final tax position is still only calculated once everything has been finalised.
Do I need expensive accounting software?
No and If you’re already using software such as Xero or QuickBooks, MTD is already part of the software.
If you’re using spreadsheets, there are ways to remain compliant without completely changing how you work and this is where your friendly accountant earns his keep.
Is this going to make life easier?
HMRC certainly hopes so.
Some businesses will probably find it easier because they’re already keeping digital records.
Others may wonder why something that previously took one annual submission now appears to involve enough deadlines to rival Christmas shopping.
As accountants, we’ll reserve judgement.
Our advice
Don’t leave it to the last minute.
A little preparation now saves a lot of stress and time later.
We’ll help you:
- Register correctly.
- Choose the right software (if you need any).
- Explain what information we need each quarter.
- Make the whole process as painless as possible.
- Well… as painless as tax can ever be.
The good news
Despite what you might read online, this isn’t the end of the world.
Most of our clients already keep the majority of the information we need electronically, so for many people the changes are more about how the information is submitted than what information is required.
And if you’re unsure whether MTD applies to you give us a call before HMRC does.
Tax Compute
July 2027