Making Tax Digital

What actually changes for you, in practice

Making Tax Digital for Income Tax does not replace the annual return. The Self Assessment tax return still has to be completed and submitted after the year end, through MTD-compatible software. What changes is the rhythm around it: digital records kept as you go, and quarterly updates submitted through that software during the year.

The part people underestimate is not the software. It is the habit. A quarterly update is a summary of the digital records you have kept, so the records have to exist as you go rather than being assembled afterwards. Under Self Assessment it was possible, if not advisable, to keep a shoebox and sort it out in January. Quarterly deadlines arrive before the shoebox gets opened.

If your question is whether this applies to you and from when, that depends on your qualifying income and the year, and we have set the thresholds, the deadlines and the exemptions out properly in our article on Making Tax Digital for Income Tax, which is kept under review and cites the HMRC guidance directly. This page is about what we do rather than about what the rules say.

Checking whether MTD applies to you, and getting you set up

The work starts before any filing does. The first question is whether you are required to use Making Tax Digital for Income Tax at all, and from which tax year, which turns on your qualifying income rather than on your profit. HMRC looks at the Self Assessment return and writes to people it expects to be brought in, but the obligation to check sits with the taxpayer rather than with HMRC to notify, which is how people arrive at a deadline they did not know they had.

Where you are in scope, we get you set up for Making Tax Digital and put in place the authorisation that lets us act for you on MTD matters with HMRC. From September 2026 HMRC has been automatically signing up some taxpayers who were required to use MTD from April 2026 and had not signed up themselves, and agents can still sign clients up where that is needed. Either way, getting it in place early matters more than it sounds: it means the first quarterly deadline is not also the first time anybody has looked at the account.

What we do for each quarterly update

We keep the records digitally as the quarter runs rather than assembling them at the deadline, review what is there before anything is submitted, and make the quarterly submission through compatible software. After the year end we complete and submit the tax return itself through the same software, which is where the return you would recognise actually happens.

One thing worth knowing, because it surprises people and it is a common misunderstanding: the quarterly updates are cumulative from the start of the tax year rather than each covering only its own three months. So a correction made in a later quarter is picked up rather than stranded, and the updates are running totals rather than four separate filings.

Getting ready, if you are not on software yet

For businesses still on spreadsheets or on paper, the records are the change that takes the time, not the filing. A spreadsheet can still be part of a compliant setup, where it is digitally linked to compatible software that makes the submissions: moving everybody onto a full accounting package is not something MTD requires, and we will say so rather than sell you a migration you do not need.

Where new software is the right answer, that is a setup and training job: choosing something appropriate, setting it up so the categories match how you actually work, setting up bank feeds where appropriate, and being shown how to use it. A business that starts keeping digital records a year early has a year of practice and one quiet transition. A business that starts the month it becomes mandatory has a deadline, unfamiliar software and a set of records that has not been reconciled yet, all in the same fortnight.

If your records are behind before any of this starts, a clean-up may be needed first. Quarterly updates prepared from records that do not currently agree simply report the disagreement more often.

If you are already inside MTD for VAT

VAT-registered businesses have been keeping digital records and filing through software for some years, so a good deal of this will already be familiar and the software may already be in place.

The two regimes are separate, though, and being compliant for VAT does not automatically mean you are ready for Income Tax: the qualifying income test, the deadlines and what has to be submitted are different. What usually transfers is the habit rather than the setup, and the habit is the harder half to acquire.

What we will tell you about your MTD position

If it turns out you are outside the scope for now, we will say so rather than sell you a service you do not yet need. Some people are outside it on income, some have an exemption available depending on the circumstances, and some have a start date further out than they think.

And where a deadline has been missed or the position is already untidy, penalties may apply depending on the circumstances. The rules carry transitional provisions in the early years of the regime, so rather than print a figure here that dates, the current position is set out in our article on Making Tax Digital for Income Tax, which is kept under review.