- Chislehurst South East, London
- +44 7880 865106
- info@sgmaccountants.co.uk
Ensure you comply with Making Tax Digital and avoid penalties. Get Ready for MTD Before the Deadline – book your free consultation today!
Making Tax Digital for Income Tax, previously known as 'MTD for Income Tax Self Assessment' or 'MTD for ITSA', will replace the current system of annual Self Assessment tax returns. MTD for Income Tax will come into effect in April 2026 for self-employed individuals and landlords with income of more than £50,000, in April 2027 for those with income over £30,000, and by 2029 at the latest for those with income over £20,000.
4 quarterly updates per business
1 annual final declaration per individual
Filing through MTD-compliant software
Digital records required
MTD for VAT requires all VAT-registered businesses to keep digital records and use MTD-compatible software to submit VAT returns electronically.
Xero is award-winning software that simplifies MTD compliance, boosts reporting, and helps us support you with timely advice and insights.
FreeAgent makes MTD simple with easy-to-use tools, real-time insights, and smooth collaboration between you, your accountant, and bookkeeper.
QuickBooks simplifies MTD for Income Tax with smart tools, real-time data, and seamless collaboration between you, your accountant, and bookkeeper.
MTD began in April 2019 for VAT-registered businesses over the £85,000 threshold and was extended in April 2022 to all VAT-registered businesses.
Upcoming milestones for MTD for Income Tax (ITSA):
April 2026: Applies to self-employment and/or property income over £50,000
April 2027: Applies to income over £30,000
Still to be confirmed:
Rollout for those earning under £30,000
MTD for general partnerships
MTD for Corporation Tax (limited companies)
Penalties for Non-Compliance with MTD
Penalties vary by offence and may include:
£400 per improperly submitted VAT return
£5–£15 daily fines for failing to implement digital links
Up to 100% of VAT owed for errors in submitted records
30% of the VAT assessment if underpayment isn’t reported within 30 days
Businesses can still use spreadsheets. Linked cells and Excel formulas are valid MTD digital links.
Failure to comply may result in penalties, though HMRC has indicated it will take a light-touch approach initially. However, it is advisable to take proactive steps towards compliance to avoid issues later on.
You will need to keep separate digital records for each source of income and submit individual updates and End of Period Statements for each.
Please contact us now to arrange a free 1 hour meeting to see how we can help you.
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