Preparing for Making Tax Digital

With the new tax year only a few months away, many businesses are starting to plan for the introduction of Making Tax Digital (MTD). From April 2026, sole traders and landlords earning more than £50,000 will be required to send quarterly income updates to HM Revenue & Customs (HMRC).

HMRC anticipate that 900,000 taxpayers will come within the scope of MTD from April. For those affected, this represents a significant shift in how tax information is reported, so early preparation will be key to a smooth transition.

Using MTD-compatible software

One of the central requirements of MTD is the use of approved digital software. Whether you already keep your records electronically or still rely on manual methods, it is essential to ensure that your accounting software is fully compatible with HMRC’s MTD rules.

Beyond compliance, digital accounting software can offer a range of practical benefits. It can save time by automating routine tasks, improve accuracy, provide clearer insight into cash flow, and support better financial planning. When choosing software, it is worth considering how it could add value to your business as well as meeting MTD requirements.

Signing up for Making Tax Digital

HMRC will contact taxpayers who are affected by MTD based on the information in their tax returns. However, being contacted does not mean you are automatically enrolled.

Registration must be completed by you, and it is important to do this in good time to avoid any last-minute issues or missed deadlines.

Are any exemptions available?

Certain taxpayers are outside the scope, including for example, trustees and personal representatives managing the affairs of someone who has passed away do not need to register. In most cases, HMRC will notify individuals if they qualify for an automatic exemption.

There are also circumstances where an exemption can be requested, depending on personal or practical factors. If you think this might apply to you, it is worth reviewing your situation carefully.

What if your income is below £50,000?

MTD is being rolled out gradually. Mandatory participation for sole traders and landlords will begin as follows:

• From 6 April 2026 – income over £50,000 
• From 6 April 2027 – income over £30,000 
• From 6 April 2028 – income over £20,000 

If you prefer, you can choose to join MTD earlier on a voluntary basis.

Does MTD affect partnerships?

At present, partnerships are not required to comply with MTD for Income Tax. However, HMRC has confirmed that partnerships will be included at a later stage, with further details and timelines to be announced in the future.

Need support with Making Tax Digital?

Selecting the right software can feel overwhelming, but support is available. We can help you choose a solution that suits your business, provide training if needed, and take care of your MTD registration.

Please contact our Lead Digital Advisor, Elaine Hardy, on 01942 292542 or email elaine.hardy@teamjs.co.uk.