Making Tax Digital: What You Need to Know
The UK government is modernising the tax system with its Making Tax Digital (MTD) initiative — a move designed to help businesses stay organised, reduce errors, and save time by going fully digital with their tax affairs.
What Is Making Tax Digital?
MTD is a government-led programme aiming to replace traditional paper-based tax processes with digital tools. By using compatible software, businesses can more easily manage and submit their tax returns, with many already reporting faster submissions and fewer mistakes.
Since April 2022, all VAT-registered businesses must keep digital records and submit VAT returns via MTD-compatible software. Now, the government is expanding this approach to cover more income types.
What's Changing?
✅ MTD for Income Tax Is Expanding
Starting from:
- April 2026 - Sole traders and landlords with income over £50,000
- April 2027 - Those earning over £30,000
- April 2028 - The threshold drops to include those with income over £20,000
This phased rollout gives smaller businesses and landlords more time to prepare for the changes — while opening up the benefits of digitalisation to nearly a million more people.
✅ Exemptions and Deferrals
Some groups will be exempt or deferred from MTD, including:
- Those with Power of Attorney
- Certain non-UK residents (like entertainers and sportspeople)
- Ministers of religion
- Lloyd's underwriters
- Recipients of Blind Persons' or Married Couples' Allowance
Those needing to file using SA109 (e.g., non-UK domiciled individuals) will also see delayed requirements until April 2027.
✅ Unified Submission Process
To simplify the tax experience, users will soon be required to submit both quarterly updates and their final tax return through MTD-compatible software, no more switching between different systems.
Why This Matters
The move to Making Tax Digital isn't just a compliance update — it's an opportunity. Businesses using digital tools often find broader efficiency gains, improved accuracy, and time saved.
If you're a sole trader or landlord, or you support businesses in the UK, this is a key policy to keep an eye on.
Stay Ahead of the Curve
As MTD continues to roll out and evolve, we'll keep this page up to date with the latest developments, deadlines, and tips.
Bookmark this page for quick reference.
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