Making Tax Digital (MTD) for Income Tax represents the most significant change to the Income Tax system since HMRC introduced Self Assessment more than 30 years ago. Affected taxpayers will be required to keep digital records and submit quarterly updates to HMRC, alongside their annual tax return.
Who is Affected?
MTD for Income Tax applies to sole traders, landlords, and those with a combination of self-employment and property income.
How is Turnover Calculated?
Turnover is the total gross income from all self-employed businesses and rental properties before expenses are deducted.
When Does MTD Start?
Over £50,000: already in scope. Over £30,000: from 6 April 2027. Over £20,000: from 6 April 2028.
What Do You Need to Do?
Digital records must be maintained using compatible software. Popular options include Sage, QuickBooks, Xero, FreeAgent and Hammock.
Quarterly Submissions
Quarterly updates are submitted to HMRC throughout the year, helping build an estimate of your annual tax position.
Do You Still Need a Tax Return?
Yes. Annual Self Assessment returns remain mandatory and will include all other sources of income and year-end adjustments.
How Can A G Smith & Co Help? We can advise on MTD eligibility, software selection, bookkeeping, quarterly submissions and annual tax return preparation.
HMRC - Making Tax DigitalAuthor: Emma Magill | Practice Manager
