Are you prepared for Making Tax Digital?
Making Tax Digital (MTD) is just around the corner so it’s time to start getting prepared. In this blog, we’ll cover the changes that are being made, when they come into effect and what you need to do to get ready for them.
What is Making Tax Digital?
Making Tax Digital is part of the Tax Administration Strategy from the government. Under MTD, businesses and individuals must:
- Keep records digitally
- Manage their tax using MTD compatible software
- Submit updates quarterly to HMRC
Making Tax Digital for Income Tax
The introduction of MTD for VAT, introduced on 1st April for VAT-registered businesses, kickstarted HMRC’s goal to create a more modern, efficient and transparent tax system. This aimed to make it easier for businesses to get their taxes right by limiting human error and making tax reporting more accurate.
From 6th April 2026 this same initiative will also apply to MTD for Income Tax.
What will the changes be and when will they happen?
Affected taxpayers will begin to hear from HMRC about the upcoming changes.
Here is the Making Tax Digital schedule:
April 2025 – The digital processes will not be mandatory yet, but sole traders and landlords with the relevant income can choose to adopt MTD early.
We’ll be offering a cross-section of clients access to this beta test to help us prepare for the new legislation.
April 2026 – MTD is no longer optional. If you are self-employed or a landlord with an annual business/property income of more than £50,000, you must comply with the new rules.
April 2027 – The MTD income threshold will be lowered to £30,000.
How will the MTD changes affect businesses?
Keeping Your Records Digitally – Businesses will be required to transition away from paper records and manual spreadsheets over to digital record-keeping. For this, you’ll need to store your financial records using MTD-compatible software.
Comprehensive Compliance – Compliance will be a focus after the MTD changes, with new rules on how your information can be processed by your software and systems. Gone are the days of copying and pasting figures between spreadsheets!
Extra Submissions – You’ll need to keep on top of your bookkeeping year-round as HMRC will require you to submit updates quarterly rather than just the one annual self-assessment tax return.
Aardvark Are Here To Help
As we start our testing between now and April 2026, we will continue to learn more about the MTD processes and what the new legislation means for businesses. We’re here to support you through all the changes with our main goal being to make this a simple and smooth transition for all our clients.
If you find yourself unsure about the new submission deadlines, MTD software or anything else about the changes, don’t hesitate to get in touch with your client director, who will be able to offer their expertise and answer any questions you might have.
Note: All the information and advice in this blog post was correct at the time of writing.
