The UK government’s Making Tax Digital (MTD) initiative is transforming the way businesses manage and report their taxes. Designed to make the tax system more efficient and easier for taxpayers to get right, MTD has already changed the landscape for VAT-registered businesses and is now expanding to include Income Tax.
If you’re a sole trader or landlord, staying ahead of these changes is vital. Here’s the latest on where we are with MTD in 2025, what’s coming next, and how Porter Garland Chartered Accountants can help you to prepare.
Where are we now?
As of September 2025, the current status of MTD is as follows:
MTD for VAT
- Compulsory for all VAT-registered businesses, regardless of turnover, since April 2022.
- Businesses must keep digital records and submit VAT returns using MTD-compatible software.
- Penalties now apply for non-compliance, following the introduction of a points-based penalty system in January 2023.
MTD for Income Tax Self-Assessment (ITSA)
- MTD for ITSA will go live in April 2026, after being postponed several times.
- It will apply to self-employed individuals and/or landlords with aggregate gross income over £50,000 in the 2024/25 tax year.
- From April 2027, those earning over £30,000 will also be required to join the system.
What Will Change with MTD for Income Tax?
For self-employed individuals and landlords who fall within the threshold, the process of submitting one annual Self-Assessment return will be replaced with:
- Digital Record Keeping – using HMRC-recognised software to maintain income and expense records, such as Xero, Quickbooks or Hammock.
- Quarterly Submissions – four submissions per year to HMRC, summarising income and expenses.
- End of Period Statement (EOPS) – submitted after the tax year, finalising the annual figures.
- Final Declaration – replicating the EOPS on your traditional tax return, declaring any additional income and reliefs confirming the full tax position.
Key Upcoming Deadline Dates
Here’s a summary of what to expect and when:
- April 2026: MTD for ITSA starts for self-employed and landlords with aggregate 2024/25 income over £50,000.
- April 2027: Threshold drops for self-employed and landlords with aggregate 2025/26 income over £30,000.
How to Prepare Your Business for MTD
Preparation is key to a smooth transition. Here are the practical steps businesses and individuals should take now:
1. Check Your Eligibility
- Review your income to see whether you fall into the £50,000 (or soon, £30,000) threshold for MTD for ITSA.
- If you’re VAT-registered, ensure you are already MTD-compliant.
2. Go Digital
- Choose MTD-compliant accounting software like Xero, QuickBooks or Hammock.
- Spreadsheets are still allowed but must be linked to digital bridging software.
3. Get Organised Early
- Don’t wait until the deadline—start keeping digital records now.
- Familiarise yourself with quarterly submissions by doing mock updates.
4. Talk to Porter Garland
- We can help you choose the right software and ensure your tax processes are compliant.
- We can also prepare and file your quarterly submissions and EOPS filings.
5. Review Internal Processes
- Train yourself (if applicable) on digital record-keeping.
- Update your procedures for invoicing, expense tracking, and reconciliations.
Final Thoughts
Making Tax Digital is a major shift in the way UK businesses manage their tax affairs. While the deadlines may seem a little way off, starting early will make the transition far easier and help avoid penalties.
If you’re unsure about how these changes affect you or need help getting your systems MTD-ready, Porter Garland Chartered Accountants are here to help. Get in touch today for personalised advice tailored to your business – call us now on 01276 674870.