What is Making Tax Digital and Does It Affect Me?

Making Tax Digital (MTD) is HMRC's programme to modernise the UK tax system by moving to digital record-keeping and online submissions. It's one of the most significant changes to UK tax administration in decades — and it's already affecting many businesses, with more individuals coming into scope from April 2026.

What is Making Tax Digital?

Making Tax Digital requires taxpayers to keep digital records and submit tax information to HMRC using approved software, rather than through a traditional paper or online annual return. The aim is to reduce errors, make tax administration more efficient, and give taxpayers a more real-time view of their tax position.

MTD for VAT — Already in effect

MTD for VAT has been in place since April 2019 for businesses above the VAT threshold, and since April 2022 for all VAT-registered businesses. If your business is VAT registered, you must already be using MTD-compatible software to keep digital records and submit your VAT returns.

MTD for Income Tax Self Assessment (MTD for ITSA)

The next major phase is MTD for Income Tax, which affects self-employed individuals and landlords:

Instead of filing one annual Self Assessment return, you'll need to submit four quarterly updates to HMRC throughout the year, plus a final end-of-year declaration. Each quarterly update summarises your income and expenses for that period.

What does this mean in practice?

If you're affected, you'll need to:

• Keep your business records digitally using MTD-compatible software (such as Xero or QuickBooks)
• Submit quarterly updates to HMRC — roughly every three months
• Submit a final year-end declaration confirming your annual figures

The quarterly updates don't replace your year-end tax calculation — you'll still have a final liability calculated at the end of the year. But the quarterly submissions mean HMRC has a much more up-to-date picture of your income throughout the year.

Does MTD affect you?

You'll be affected by MTD for ITSA from April 2026 if you are self-employed (sole trader) or receive rental income, and your combined qualifying income from these sources exceeds £50,000 per year. If you're currently below this threshold but growing, it's worth preparing now — the £30,000 threshold from April 2027 will bring significantly more people into scope.

How can White & Co Accountants help?

At White & Co Accountants in Sutton Coldfield, we help clients at every stage of their MTD journey — from checking whether you're affected, to setting you up on the right software, to handling your quarterly submissions on your behalf. We're also Xero and QuickBooks partners, meaning you can access discounted software pricing through us.

Whether you want us to handle everything or just make sure you're set up correctly, we're here to make MTD as straightforward as possible.