Making Tax Digital (MTD) is one of the biggest changes to the UK tax system in years.
If you’re a sole trader, a self-employed CIS contractor or a landlord, this is something that will directly affect you. It’s important you understand how to work compliantly. From April this year, you’ll need to work differently if you earn £50k+. Next year (2027), people earning £30k+ and above will need to comply, and in 2028 the MTD rules will apply to those earning £20k+. When MTD applies, you’ll need to:
- Submit quarterly online tax reports via approved software, not annual self-assessment
- Keep digital records of all income and expenses
- File your year-end return digitally too
- Replace spreadsheets and paper invoices with digital records and a separate, approved MTD software
- Keep your records safe and compliant.
The move from one annual submission (the self-assessment tax return) to quarterly reporting is the main change you need to note. Instead of preparing everything once a year, you’ll submit updates every three months along with a final declaration at year-end. While HMRC’s aim is greater accuracy, the reality for many self-employed people is more administration and more opportunity to miss a deadline if systems aren’t in place. If you’re affected from April this year, the following deadlines will apply:
What Happens If You Don’t Comply?
HMRC has indicated there will be an initial period of leniency as the system beds in, but this will not last indefinitely. A points-based penalty system will apply to missed submissions, and once the threshold is reached, financial penalties follow. Leaving things until the last minute increases the risk of errors, late filings and avoidable fines. Acting early reduces stress and keeps you in control.
Get Prepared – How We Can Help
MTD requires you to use HMRC-compliant software such as FreeAgent or another compatible platform. That may feel like a steep learning curve, which is why we make the process straightforward and manageable. Find out more about our simple MTD-compliant service. Our team can help you get set up properly from day one. We guide you through using FreeAgent (or a compatible software of your choice), so you feel confident recording income and expenses digitally. We don’t just switch it on and leave you to it. We show you how it works, explain what you need to do, and support you until you’re comfortable with the system. Once you’re up and running, we continue to work with you throughout the year. We monitor deadlines, make sure submissions are prepared correctly, and ensure everything is filed accurately and on time. You won’t have to worry about missing a quarterly update or second-guessing whether something has been done properly, we handle it with you and for you.
Next Steps
MTD is on the horizon and the earlier you take action, the better. From setup and software guidance to ongoing quarterly submissions and compliance support, we ensure everything is done correctly and on time. Get in touch to find out more.