Tracy Priest, associate director at Streets, breaks down the Making Tax Digital initiative.
Making Tax Digital (MTD) is HMRC’s initiative to modernise the UK tax system by requiring digital record-keeping and quarterly reporting. If you are a sole trader or landlord with income over £50,000, MTD will apply to you from 6 April 2026.
This change is the most significant change to UK tax reporting since self-assessment was introduced nearly 30 years ago and will affect how you manage your tax affairs.
Who will be affected?
You will need to comply with MTD if:
- You are registered for self-assessment
- You earn income from self-employment, rental property or both
- Your combined income from these sources exceeds £50,000 (based on your 2024/25 tax return)
HMRC plans to extend MTD to those earning over £20,000 in future phases.
What will change?
Under MTD, you will be required to:
- Use HMRC-approved software to maintain digital records
- Submit quarterly updates of income and expenses
- Finalise your annual tax position digitally, including other income, allowances and reliefs
If you have both rental and self-employment income, you will need to submit eight quarterly reports per year, plus a final declaration.
What you’ll need to do
- Choose and set up compatible software
- Register for MTD with HMRC
- Keep digital records for each business or property
- Consider using a separate bank account for business/rental transactions to simplify record-keeping
This will increase your administrative workload, so early preparation is key.
How we can support you
We offer a range of flexible service packages to suit different needs:
- Standard Package: you manage your own digital records and software. We assist with your annual tax return based on your quarterly submissions and other income details.
- Premium Package: we handle everything—from software setup and bookkeeping to quarterly submissions and your final return.
- Tailored Options: If you need support somewhere between these two, we can customise a package to match your level of involvement, budget and business complexity.
Our goal is to make MTD manageable, not overwhelming.
Next steps
MTD is now only a few months away for some taxpayers. Delaying setup may limit your options and increase the risk of non-compliance. We recommend discussing your readiness with a professional tax advisor as soon as possible.
If you would like support or guidance or have any questions, we would be happy to guide you through what is likely to be a period of adjustment and work with you to make your transition to MTD smooth, compliant and stress-free. For more information, please visit www.streets.uk or email info@streets.uk
See this column in the September issue of East Midlands Business Link here.
