Making Tax Digital: What UK Small Businesses Need to Know
Making Tax Digital is HMRC’s programme to move UK tax administration from paper-based and annual processes to digital, quarterly reporting. It represents the biggest change to how small businesses interact with the tax system in a generation, and the deadlines are approaching fast.
MTD for VAT has been in effect since April 2022, requiring all VAT-registered businesses to keep digital records and submit VAT returns using MTD-compatible software. If you’re VAT registered, you should already be compliant. The next major milestone is MTD for Income Tax Self-Assessment, which takes effect from April 2026 for self-employed individuals and landlords with qualifying income above £50,000, with the £30,000 threshold following in April 2027.
Under MTD for Income Tax, affected sole traders and landlords will need to submit quarterly summaries of their business income and expenses to HMRC using compatible software, followed by a final end-of-period statement. This replaces the current annual self-assessment return for those within scope. The shift requires not just new software but a fundamental change in how many sole traders manage their bookkeeping – moving from annual receipt-gathering to ongoing digital record-keeping.
Our Making Tax Digital guides explain exactly what’s changing, who’s affected, and when you need to act. We cover the practical steps: which accounting software is MTD-compatible, how to set up digital record-keeping if you’re currently using spreadsheets, what the quarterly submissions actually involve, and how to avoid penalties for late or incorrect submissions.
We also cover the specific implications for landlords, who face their own version of MTD requirements, and for businesses that use agents or accountants to handle their tax affairs. If you’re not sure whether MTD applies to you yet, start with our overview guide below, which walks you through the thresholds and timelines clearly.
