Making Tax Digital for Income Tax: are you ready?

Making Tax Digital (MTD) for Income Tax is the biggest change to Self Assessment since it was introduced. Instead of one annual return, affected sole traders and landlords now keep digital records and send HMRC quarterly updates using compatible software.

Who has to join, and when?

Whether you are affected depends on your qualifying income: your combined gross income (turnover, not profit) from self-employment and property.

HMRC looks at the income on your tax return for an earlier year to decide when you need to start, so it is worth checking your position now.

What changes in practice?

• Digital records: income and expenses must be recorded in MTD-compatible software.
• Quarterly updates: a summary of income and expenses goes to HMRC each quarter, by the 7th of the month after the quarter ends.
• Final declaration: this replaces the traditional tax return and is still due by 31 January after the end of the tax year.

Quarterly updates are not extra tax payments. Payment dates stay the same; you are simply reporting more often.

How to prepare

1. Check your qualifying income and the date MTD will apply to you.
2. Choose software that suits the way you work.
3. Move to digital record keeping before your start date, so the first quarter is not a scramble.
4. Decide who will submit the updates — you, or us on your behalf.

How we can help

We can confirm whether and when MTD applies to you, recommend and set up the right software, and take care of the quarterly submissions so you can concentrate on your business or property portfolio.