MTD – MAKING TAX DIGITAL FOR INCOME TAX

Any final accounting adjustments can still be made at the end of the year when the tax return is filed and any other income or tax reliefs can be added at this point as well, if applicable.

These changes will help to:

1. Reduce the chance of making errors.

2. Ensure you have up to date, accurate information to help with business planning.

3. Move tax records at HMRC, onto one new system supporting wider improvements now, and in the future, so HMRC can deliver a better customer experience.

4. Make sure everyone pays the right amount of tax.

Note – Anyone using MTD for VAT will already be used to the process and the move will feel a little less daunting but to anyone who will be transitioning for the first time, rest assured, it is not as painful as it sounds.

WHO WILL BE AFFECTED?

You will need to use Making Tax Digital for Income Tax if all the following apply:

· You’re an individual registered for Self Assessment

· You get income from self-employment or property, or both and,

· Your qualifying income is more than £30,000.

Your qualifying income is the combined Turnover (not profit) from self-employment and/or property income.

WHEN WILL THIS AFFECT ME PERSONALLY?

6 April 2026

You will need to use Making Tax Digital for Income Tax if all the following apply:

· You are an individual registered for Self-Assessment.

· You get income from self-employment or property, or both, before 6 April 2025.

· You have a qualifying income of more than £50,000 in the 2024 to 2025 tax year.

6 April 2027

You will need to use Making Tax Digital for Income Tax if all of the following apply:

· You are an individual registered for Self-Assessment.

· You get income from self-employment or property, or both, before 6 April 2025.

· You have a qualifying income of more than £30,000 in the 2025 to 2026 tax year.

FILING DATES

Quarterly Updates – Tax Year Periods are to be provided in respect of incremental 3-month periods (same periods for everyone, irrespective of the accounting date).

Therefore, all MTD for Income Tax mandated taxpayers file to the same periods:

6th April – 5th July. Filing due by 5th August.

6th July – 5th October. Filing Due 5th November.

6th October – 5th January. Filing due 5th February.

6th January – 5th April. Filing due 5th May.

But …

– Customers have an option to elect to file to “Calendar Quarters” (rather than 6-5th month odd days) The filing dates remain unchanged.

Q1 Start 1st April – 30th June. Filing date 5th August.

Q2 Start 1st July – 30th September. Filing date 5th November.

Q3 Start 1st October – 31st December. Filing Date 5th February.

Q4 Start 1st January – 31st March. Filing Date 5th May.

HOW DO I DO THIS?

It’s very easy – Give us a call and let us help you transition, we will:

· Sign you up to MTD using our agent government gateway account with HMRC and;

· Choose the best software package to suit your needs.

All we need from you is:

To send us your records in a timely manner – preferably monthly, depending on the number of transactions. We will discuss your individual needs and requirements separately.

WHAT ABOUT EXTRA COSTS?

Unfortunately, there are likely to be some additional costs such as software and possibly slightly increased accounting fees, depending on the level of transactions and workload for the individual client.

For most clients, the increased cost will be minimal and will equate to the normal annual accounting bill but will be due in quarterly instalments (or monthly if you prefer), to match the filing dates so will in effect be better on your cashflow and allows for timely tax planning decisions.

We pride ourselves at Landi on having a great team to look out for all your business needs including keeping your accounting fees at a fair and competitive price that works for you so that you can rest assured we strive to find the best package to suit your needs.

VOLUNTARY ENROLLMENT / EARLY ACCESS

You don’t have to wait util April 2026 to sign up, you can enrol from the 6th April 2025 and have a year to get used to the transition into Digital reporting. The benefits of this are:

· More time to plan and transition.

· No HMRC penalties for errors etc. for the quarterly updates during the testing period.

· Peace of mind that, come April 26 or April 27 (whichever bracket you fall into), you are already signed up and running smoothly so no need to worry about the looming compulsory submissions and you can concentrate on running your business.

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Please contact us for a chat to discuss the process further and to answer any questions that you may have about how the process will work for you.