Making Tax Digital for Income Tax (MTD IT) is coming!

Your tax filing obligations with HMRC are changing! Are you ready?

Make way for…

MTD IT (Making Tax Digital for Income Tax)

HMRC are currently having a big push to raise awareness of MTD IT, and what better way to raise awareness of Making Tax DIGITAL than sending old fashioned paper through the post! 🤷‍♂️ 🐌

…but, what is MTD IT?

• MTD IT stands for Making Tax Digital for Income Tax. This is HMRC’s next push on digitising the UK tax system

• HMRC want those who meet the criteria to make quarterly submissions of their financial data (more below 👇)

• HMRC will also want a fifth and final submission, akin to the current Tax Return
  
  Will it impact me?...

• MTD IT will first impact sole traders and landlords (not partnerships or companies…yet)
  

  
  When do I need to be compliant with MTD IT?
  

• Gross income of £50k and over - you’re in from April 2026

• Gross income of £30k and over - you’re in from April 2027

• Gross income of £20k and over - you’re in from April 2028
  - NOTE this is income/sales/revenue - not profit! -

  The gross income criteria is assessed from your 2024-25 Tax Return (which is due for filing by 31st January 2026).
  
  What do I have to do to avoid penalties and fines?
  GET ACCOUNTING SOFTWARE!
  GET ACCOUNTING SOFTWARE!
  GET ACCOUNTING SOFTWARE!

OK, seriously though →

• Keep digital records of income and expenses
  

• Submit quarterly updates to HMRC - either yourself or your accountant (hey! 👋 ) can do this

• Submit an end of period statement by 31st January following the tax year - usually your accountant will do this to ensure all accounting adjustments and tax breaks have been utilised
  
  Did I mention, GET ACCOUNTING SOFTWARE! - Even if you don’t want to make the submissions to HMRC, having accounting software will help you to maintain accurate records so that your accountant can make the submissions in a timely manner for you.
  
  If you don’t want to pay for accounting software, look into getting a business bank account with Natwest or Mettle to get FreeAgent Accounting Software for free! (at time of posting) It’s actually very good!
  
  Yes, it’s another admin burden for you to undertake BUT any business which isn’t maintaining digital accounting records should try to see the positives;
  

• you will maintain financial data more regularly

• you can monitor key financial levers/indicators of your business from the software reports
  at the click of a button you can see which customers owe you money, and chase this in

• you will do away with bags, boxes and whatever else, of paper records

• you won’t feel the stress of the January tax deadline anymore

• you can access your financial data wherever and whenever, on the cloud
  
  If you’re unsure of your obligations with MTD IT, or have any questions, get in touch! 👍