Making Tax Digital (MTD) is a Government initiative to digitise the tax system and to make reporting easier and more efficient. It requires business owners to keep digital records and submit returns to HMRC using software. For now, MTD for income tax will only apply to sole traders and landlords. Limited companies will be brought into MTD for corporation tax eventually.
MTD for VAT has already come into force and all VAT-registered businesses now must use software to submit their VAT returns to HMRC, unless they are covered by one of the limited exemptions.
What’s changing?
MTD for income tax is being brought into force in stages, starting from April 2026. Depending on your turnover, you might need to comply with the requirements from this date.
| Turnover | Start date |
| More than £50,000 | April 2026 |
| More than £30,000 | April 2027 |
| More than £20,000 | Date to be announced |
This applies to sole traders and landlords only for now – partnerships will be required to sign up for MTD for income tax at a later date to be announced. Companies will be required to sign up to MTD for corporation tax, but the date for this hasn’t been announced either.
What changes do I need to make?
If you’re already using software such as Xero, QuickBooks or FreeAgent to keep your business records, you don’t need to do anything.
If you’re still using spreadsheets or paper records, you need to start using software. The sooner you do this, the better as it allows you enough time to get ready for when it becomes mandatory. We can help you with this transition.
Will I need to start paying tax earlier?
No. HMRC has been clear that the payment dates for self-assessment won’t change.
Where do I start?
Get in touch with us today to discuss how MTD will affect your business. We can help you transition to digital record-keeping so that you are ready when it becomes mandatory.
