Making Tax Digital for Income Tax
Clear support with digital records, quarterly updates
and the move to MTD.
Making Tax Digital is changing how sole traders and landlords keep their records and report income to HMRC. Whether it already applies to you or you are preparing for a future phase, we can help you understand what is required, choose the right record-keeping option and manage the submissions throughout the year.
MAKING TAX DIGITAL THRESHOLDS
Will Making Tax Digital affect you?
Making Tax Digital for Income Tax is being introduced in stages for sole traders and landlords registered for Self Assessment
The date it applies to you depends on your qualifying income. This means your total income from self-employment and property before expenses are deducted. If you have more than one source, the amounts are added together.
Over £50,000
MTD applies from 6 April 2026
Over £30,000
MTD applies from 6 April 2027
Over £20,000
MTD applies from 6 April 2028
HOW MTD WORKS
What changes under Making Tax Digital?
Instead of most of your reporting taking place after the tax year has ended,
your records will be kept digitally and information will be sent to HMRC at several points throughout the year.
Your MTD year at a glance
THE REPORTING CYCLE
During the year, Accountably will prepare four quarterly updates, followed by the final declaration and your separate annual tax return.
Quarter 1
6 April to 5 July
HMRC deadline: 7 August
Quarter 2
6 July to 5 October
HMRC deadline: 7 November
Quarter 3
6 October to 5 January
HMRC deadline: 7 February
Quarter 4
6 January to 5 April
HMRC deadline: 7 May
Final Declaration
The four quarters are brought together and the necessary year-end adjustments are made.
Annual tax return
Your complete personal tax position is calculated and your annual tax return is submitted.
What happens each quarter?
Each quarter, HMRC requires a summary of your self-employment or property income and expenses. The information comes from your digital records and is submitted in stages throughout the year.
A quarterly update is not a completed set of accounts or a separate tax return. The final accounting and tax adjustments are dealt with after the year has ended.
Before each update, Accountably will:
- Review the records provided for the quarter
- Check for missing or unclear information
- Raise any questions that need to be resolved
- Prepare the figures in the format required by HMRC
- Submit the quarterly update through MTD-compatible software
HMRC may show an estimate of your developing tax position after an update.
This is not a new tax bill, and no payment becomes due simply
because a quarterly update has been submitted.
YOUR RECORD-KEEPING OPTIONS
How will I keep my records digitally?
Keeping digital records does not mean that you need to choose or set up a new system by yourself.
Accountably works with two record-keeping options for Making Tax Digital, and we will help you decide which is most suitable.
Here’s a simple guide to help you see your options.
Xero
Xero is Accountably’s main cloud bookkeeping system.
It keeps your business records together and
allows you and Accountably to work from the same up-to-date information.
Xero may be suitable if:
- You have regular transactions
- You want bank transactions brought into your records
- You would like to store receipts digitally
- You would benefit from up-to-date reports
- You would like Accountably to work directly within your records
An MTD-ready Excel spreadsheet
Excel may provide everything needed for
a smaller business with fewer and
more straightforward transactions.
Excel may be suitable if:
- You have a smaller number of transactions
- Your income and expenses are straightforward
- You are comfortable keeping a spreadsheet updated
- You do not need the wider bookkeeping features available through Xero
- You are happy to enter/import transactions manually
WORKING TOGETHER
Support throughout your MTD year
You will not be expected to manage these changes alone. Accountably will explain what we need from you, tell you when your records need to be ready and manage each quarterly submission.
Before each update, we will review your records, check anything missing or unclear, prepare the figures and submit the update to HMRC.
After the fourth update, we will complete the final declaration. Your annual tax return remains a separate piece of work and a separate charge.
Choose and set up your system
We will help you choose between Xero and Excel and set up the agreed option.
Records reviewed each quarter
We will review your information and contact you if anything needs checking.
Your submissions handled
We will prepare and submit all four quarterly updates and complete the final declaration.
What Happens Next?
Getting started with Making Tax Digital
You do not need to understand every part of Making Tax Digital before you speak to us. Start with where you are, and we will help you understand when MTD applies, which record-keeping option will suit you and what needs to happen next.
Tell us where you are now
We will ask about your income, how you currently keep your records and when MTD is likely to apply.
We’ll talk through your options
We will talk you through Xero and Excel, the quarterly routine and the support Accountably can provide.
Get ready with a clear plan
You will know which system will be used, what information we need and what happens before your first quarterly update.
