Making Tax Digital

Cyan coloured logo with Tax next to it

Making Tax Digital (MTD) is part of Government plans to modernise the tax system. This has the effect of forcing digital records and submissions.

We have already seen the implementation of MTD for VAT. MTD for VAT effectively removed the ability to ‘re-key’ your VAT return boxes before submitting them to HMRC. This was a key part of the Governments drive with the aim of ‘reducing error’ and tax receipts lost as a result of error.

MTD for IT is a new way for sole traders and landlords to report their income and expenses to HMRC and will require individuals and businesses to:

  • Keep digital records
  • Use software compatible with Making Tax Digital
  • Submit updates every quarter and submit a Final Declaration (instead of just one single annual tax return)

Since 6 April 2026, some sole traders and landlords must use it, based on their total annual income from self-employment and property.

MTD for IT will be introduced in three phases:

  • from April 2026, for those with qualifying income over £50,000
  • from April 2027, for those with qualifying income over £30,000
  • from April 2028, for those with qualifying income over £20,000

What is qualifying income?

Your qualifying income is the total income you get in a tax year from self-employment and property.

As per HMRC, it is important to note that “All other sources of income reported through Self Assessment, such as income from employment (PAYE), a partnership or dividends (including those from your own company), do not count towards your qualifying income.”

Your qualifying income is also based on Gross income (aka turnover) before you deduct any expenses. Your qualifying income is based on your previous year’s tax return.

For those new to Self Assessment, HMRC have confirmed that:

“You do not need to start using Making Tax Digital for Income Tax until after you submit your first Self Assessment tax return.“

For more detail on qualifying income, see the following communication from HRMC.

How can we help you with MTD?

We can help you select and implement software to suit your needs and keep you compliant.

In addition, on an ongoing basis, we offer the following options:

  • Maintain your records on your behalf; or
  • You maintain your own records, we review before submission; or
  • Supply you with discounted software to facilitate you keeping your own records and making your own submissions.

Maintaining a well implemented digital record can be reduce admin whilst leading to a more accurate and timely record of your financial position. We expect the majority of businesses to achieve this using cloud accounting software.

Expert Guidance for Making Tax Digital

With Making Tax Digital continuing to evolve, now is the ideal time to ensure your business is prepared. Whether you’re unsure how the changes will affect you or need support with your accounting software and reporting obligations, our specialists are here to help.

Client perspective
In their words

I just wanted to express my sincere gratitude for your professionalism, wise counsel, and patience whilst supporting me with this [tax advice]. I’m conscious that the tight timeframe hasn’t made things easy, but you’ve handled it with composure and expertise – and I’m very grateful.

I’ve seen less precise and slower F1 pit stops than the service from Adam [Wingrove] and the team.

– LN – Personal Tax

LN

yorkshire-profiles

Yorkshire Profiles provides nationwide metal laser cutting and fabrication services to a wide range of industries.
We turned to Clive Owen LLP for support with our year-end accounts services and corporation tax calculations after experiencing slow response times from our previous accountants.
From the start, the team at Clive Owen LLP took the time to understand our business and answered our questions quickly and thoroughly. Thanks to their efficient approach, we were able to file our accounts promptly after our year end, enabling us to focus on business planning for the year ahead.
Their personal service, attention to detail, and speed have been exceptional. I would not hesitate to recommend Clive Owen LLP to any business in need of reliable year-end accounts services and expert corporation tax advice.
We will continue to work with Clive Owen LLP in the future.
To contact us about year-end accounts or corporation tax, click here.

Yorkshire Profiles

Yorkshire Coast Caravans

Yorkshire Coast Caravans who have been a client of Clive Owen LLP for many years said: “We have found their professionalism, knowledge and guidance extremely beneficial to the smooth running and success of our business.

Ranging from day-to-day advice on general accountancy/taxation & regulatory matters to corporate planning & strategy. Clive Owen LLP have assisted the business to focus on its core strength areas and maximise potential.

We’d have no hesitation in recommending Clive Owen LLP and their helpful team to any prospective companies.”

Contact us here to find out more about how we could help your business.

Yorkshire Coast Caravans

I am a Medical Doctor who lives in Spain and provides medical services in both the UK and Spain on a self-employed basis.

I have used Clive Owen LLP for over a decade. They have always helped me to do my tax returns and provide advice on tax matters.

It has been vital for my business to keep tax issues clear so there are no mix ups between both countries tax authorities. It is also of great value making sure I pay just the right amount of tax and keeping up to date with current regulations.

I would reccomend them to anybody who intends to do business in the UK and other EU Countries

 

J.Ruiz