Making Tax Digital for Income Tax: What you need to know
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With the ever-changing tax landscape, staying on top of compliance can feel like a full-time job. One of the biggest changes coming our way is Making Tax Digital (MTD) for Income Tax, and I’m here to break it down in a way that (hopefully!) makes it a bit less daunting.
At nära Accountancy, we’re all about making things simpler and stress-free. Whether you need help choosing software, setting up your digital records, or managing your quarterly submissions, we’ve got your back.
We’re here to offer tailored advice, hands-on support, and a friendly ear when tax talk gets too much. Let’s turn MTD for Income Tax into a smooth and positive step forward for your business!
What is Making Tax Digital for Income Tax?
MTD for Income Tax is a new initiative from HMRC that aims to modernise the UK tax system. The goal is simple: move from annual tax returns to a more dynamic, digital approach, requiring sole traders and landlords to submit tax data quarterly.
The idea is to make tax more straightforward, reduce errors, and provide a clearer picture of your tax obligations throughout the year. Essentially, it’s about bringing tax into the 21st century!
Who does it impact?
If you’re a sole trader, self-employed, or a landlord with an annual combined income or property income above £50,000, this applies to you! And from April 2027, this threshold will lower to £30,000—so even more people will be involved.
If you fall into these categories, you’ll need to keep digital records and submit quarterly updates to HMRC using MTD-compatible software.
Key dates to keep in mind
Here’s a quick timeline to help you prepare:
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April 2026: MTD for Income Tax starts for those earning over £50,000.
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April 2027: The threshold lowers to £30,000.
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Future Plans: HMRC aims to include partnerships and those earning above £20,000 at a later date, but no official timeline is set yet.
What do you need to do?
To get ready for MTD for Income Tax, here are a few steps you can take:
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Go Digital: Make sure your records are maintained digitally.
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Choose the Right Software: There are plenty of options, including Xero, QuickBooks, and FreeAgent. If you’re not sure which is right for you, I’m here to help!
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Start Early: The earlier you get used to digital record-keeping and quarterly submissions, the smoother the transition will be.
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Ensure you set up is efficient, are your business and personal transactions combined?
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Ask for Help: If this feels overwhelming, you’re not alone! I’m always here to guide you through the process.