Making Tax Digital: Is Your Business Ready?
Since April 2026, individuals earning more than £50,000 from self-employment or property income have been required to follow the new Making Tax Digital (MTD) rules. The next wave of taxpayers will follow in April 2027 when the threshold drops to £30,000, before reducing again to £20,000 in April 2028.
For business owners already balancing customers, suppliers, staffing and cash flow, another reporting requirement might feel like an unwelcome addition to the to-do list, especially considering it requires greater reporting visibility throughout the entire year, as opposed to just when tax season comes around.
For business owners already balancing customers, suppliers, staffing and cash flow, another reporting requirement might feel like an unwelcome addition to the to-do list, especially considering it requires greater reporting visibility throughout the entire year, as opposed to just when tax season comes around.
Why this matters
Many business owners still manage their finances using spreadsheets, paper records, or systems that have evolved with their organisation, but those affected by the MTD system will soon have to think differently about how financial information is captured, organised and reviewed.
The key dates
Although we’re yet to reach the first quarterly submission deadline, Making Tax Digital will already apply to you if your combined self-employment and property income on your 2024/25 tax return exceeded £50,000. However, many taxpayers who fall within the mandatory group have yet to register for Making Tax Digital.
Your next important dates to consider, are:
Your next important dates to consider, are:
- 7 August 2026: First quarterly submission deadline
- 7 November 2026: Second quarterly submission deadline
- 7 February 2027: Third quarterly submission deadline
- 7 May 2027: Fourth quarterly submission deadline
- April 2027: The rules will extend to individuals with qualifying income above £30,000.
- April 2028: The threshold falls again to £20,000.
Who is exempt from Making Tax Digital?
There are a few reasons a business or individual may be exempt from these changes. If you are, you’ll still need to report your income and gains in a Self-Assessment tax return.
You are automatically exempt if you are:
tax.service.gov.uk/guidance/check-if-you-need-to-use-making-tax-digital-for-income-tax
You are automatically exempt if you are:
- A trustee or personal representative.
- Subject to temporary exemptions (e.g., if you file non-resident pages or have complex circumstances like certain foster care scenarios).
- Deemed “digitally excluded” (e.g., due to religion, disability, or lack of internet access).
tax.service.gov.uk/guidance/check-if-you-need-to-use-making-tax-digital-for-income-tax
Steps you can take now
Businesses that leave preparation until the last minute often discover that their existing processes are not as efficient as they believed, you can prepare in the following ways:
Calculate your qualifying income: If your combined turnover for 2024/25 exceeded the current threshold of £50,000, Making Tax Digital rules will already apply to you. If you expect your combined income for 2025/26 to exceed the £30,000 threshold, please note that MTD will apply from 6 April 2027.
Register for MTD: You won’t be enrolled automatically, so use your Government Gateway credentials to register for Making Tax Digital for Income Tax on GOV.UK.
Find your software: Standard spreadsheets and paper records will no longer suffice. You must now choose and authorise HMRC-recognized software to digitally record your income and expenses, we can help you find the most suitable platform for your circumstances.
Transition to digital receipts: Get into the habit of capturing and storing invoices and receipts digitally, which makes digital transfers easier.
Prepare for quarterly updates: Instead of a single annual return, you must submit cumulative year-to-date updates every three months, therefore it’s a good idea to set up reminders to prevent missing deadlines.
Consult a professional: Reach out to our team to ensure your digital record-keeping practices comply with HMRC’s rules.
Calculate your qualifying income: If your combined turnover for 2024/25 exceeded the current threshold of £50,000, Making Tax Digital rules will already apply to you. If you expect your combined income for 2025/26 to exceed the £30,000 threshold, please note that MTD will apply from 6 April 2027.
Register for MTD: You won’t be enrolled automatically, so use your Government Gateway credentials to register for Making Tax Digital for Income Tax on GOV.UK.
Find your software: Standard spreadsheets and paper records will no longer suffice. You must now choose and authorise HMRC-recognized software to digitally record your income and expenses, we can help you find the most suitable platform for your circumstances.
Transition to digital receipts: Get into the habit of capturing and storing invoices and receipts digitally, which makes digital transfers easier.
Prepare for quarterly updates: Instead of a single annual return, you must submit cumulative year-to-date updates every three months, therefore it’s a good idea to set up reminders to prevent missing deadlines.
Consult a professional: Reach out to our team to ensure your digital record-keeping practices comply with HMRC’s rules.
More than compliance
Through conversations with clients about MTD implementation, we’ve found that businesses often focus on the software question first. While questions surrounding platforms matter, they are rarely the biggest challenge.
The businesses that experience the smoothest transitions are those that use the change as an opportunity to improve the quality of their financial information. Better reporting creates better decisions, and it becomes easier to understand profitability, manage cash flow and identify issues before they become problems.
The businesses that experience the smoothest transitions are those that use the change as an opportunity to improve the quality of their financial information. Better reporting creates better decisions, and it becomes easier to understand profitability, manage cash flow and identify issues before they become problems.
How we can help
Tommy Barnes, Associate Director and head of Business Services Support at Fiander ETL, works closely with business owners to simplify financial processes and ensure they remain compliant as regulations evolve.
We can help you:
We can help you:
- Understand how MTD applies to you or your business
- Identify any gaps in your existing bookkeeping and record-keeping processes which could create challenges once quarterly reporting begins
- Select and implement HMRC-recognised software
- Establish practical processes for recording and categorising income and expenses
- Manage and submit quarterly updates to HMRC on your behalf
- Provide training and guidance for business owners and finance teams
- Monitor key deadlines and reporting obligations.
