Making Tax Digital

Monday February 16th 2026

Making Tax Digital

For years, sole traders and landlords have followed the same annual routine for filing tax returns. They would gather their accounts information, file their tax return, and go back to business as usual. But with these new changes, the yearly rhythm is about to change.

This change in government rules, Making Tax Digital (MTD) begins in April 2026. This is only relevant to those who are earning over £50,000 from self-employment or from letting out property. Then April 2027, the earnings threshold falls to £30,000 which will add many more people into the system.

If your accountant has yet to bring this up, now is the time to check in. Getting ahead of this change and being prepared for it will make all the difference when the MTD change is introduced.

 

Quarterly Tax Reporting Is Here — Are You Prepared?

The time of only having to file your tax return once a year is coming to an end. With MTD, you’ll need to keep digital records for your business and submit quarterly tax returns to HMRC using compatible software. This will then be followed up by a final declaration at the end of each tax year.

Though this may sound like a burden, there are real benefits of Making Tax Digital, especially for those who are willing to embrace this change.

 

Real-Time Insight, Smarter Decisions

By recording income and expenses more frequently, quarterly rather than yearly you will have cleaner and more up to date financial information at your disposal. This allows you to make smarter business decisions for example, adjusting pricing, planning for your tax bill and spotting financial trends before they can cause an issue.

It also gives you the opportunity to work on your business and not just work in it. It allows you to step back from day-to-day work and look at the bigger financial picture. For many business owners this is long overdue as it gives them an opportunity to take control of their finances, instead of playing catch up each year.

If bookkeeping isn’t your strength or you don’t have time to carry it out then this is an ideal time to hire a bookkeeper or consult with an accountant about managing your digital records and quarterly returns. This is their area of expertise so you can trust that everything is being handled correctly for your financial affairs. They can also provide you with advice which could potentially help your business grow and reach the next level.

 

Will You Be Affected?

For the introduction of MTD in April 2026, HMRC will look at your turnover from self-employment and UK or overseas property. If that combined total income crosses the £50,000 threshold in the 2024–25 tax year, you must comply with MTD from April 2026.

For example, if you earn £28,000 from letting out a property and another £23,000 from self-employment, your total qualifying income is £51,000 and you’ll be expected to switch to MTD in April 2026 as you are above the threshold.

Though not all income will count towards this figure. Income from employment, dividends, pensions, or partnerships will not apply towards this £50,000 figure. And if you co-own a rental property, only your share of the income will be considered towards the £50,000 figure. Though still many people will be over this threshold without even realising it.

 

How to Get Ready

  • Check your self-employment & rental Income: Are you close to or over £50,000 threshold?
  • Talk to your accountant: They can check if you will need to comply and from when
  • Get the right software: You’ll need the correct MTD-compatible tools to submit quarterly reports.
  • Update your systems: Switch from paper or spreadsheets to digital bookkeeping.

 

Final Thoughts

Making Tax Digital is a big change, but it can also be an opportunity for you to take control over your finances. By starting to prepare now and familiarise yourself with the right digital tools for this change you can help avoid last minute stress and errors.

Don’t wait for HMRC to reach out, consult with your accountant now and make a plan that suits your needs. With the right support, this transition can be smooth and even make managing your taxes easier in the long run.

You don’t have to do it all yourself. But you do have to get started.

 

*  This article is for general information only. You are recommended to seek professional advice before taking action on the basis of the contents of this article.

 

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