Making Tax Digital (MTD)
What you need to know in 2025
From April 2026, HMRC will take the next step in its tax digitisation journey, meaning nearly 1 million individuals will need to maintain digital records and submit quarterly updates through compatible software.
These updates will affect sole traders and individuals with self-employed income, including landlords and those who are employed, but have additional self-employed earnings (such as locums). Income generated from Limited Companies and Partnerships is not captured under the scheme.
We’ll help you navigate these changes with expert advice, practical solutions and hands-on support.
What is Making Tax Digital?
Making Tax Digital (MTD) is part of HMRC’s ongoing initiative to modernise and simplify the tax system. By moving to digital record-keeping and automated reporting, the government aims to make tax administration more efficient, reduce errors and ensure accurate reporting.
For many businesses and sole traders, this will be a significant change. If they haven’t already done so, they’ll need to adopt new digital practices and adjust how they handle their tax obligations.
This isn’t just about compliance; it’s about helping people and businesses embrace more efficient ways of managing their finances.
What are digital records?
Digital records refer to the electronic maintenance of your financial information – including income, expenses and other key transactions – in a format that is accurate, complete, and up-to-date.
What’s happening and when?
HMRC have written to most of those they expect to be impacted. Here’s what you need to know:
How will this affect you?
If you’re a business owner or sole trader with income from property or other business activities, MTD could change the way you manage your tax.
Key requirements include:
If your combined income from self-employment and property exceeds £50,000 for the 2024/25 tax year, you’ll need to comply from April 2026.
What do you need to do now?
The earlier you prepare, the more likely you are to be in the best position possible come April. Here’s how to start preparing:
Understand your income threshold
Look at your combined income from self-employment and property (UK and international) for the 2024/25 tax year. If it exceeds £50,000, you’ll need to comply with MTD by April 2026.
Choose the right software
You’ll need HMRC-approved software that can handle digital record-keeping, quarterly updates and tax return submissions. We can help you find the right solution.
Get expert support
We’re here to guide you through every step of the process, from assessing your eligibility to setting up and using the right tools.
How we can help
We understand that tax changes can be daunting. That’s why we’re here to make the transition as seamless as possible.
We’ll help you:
These updates will affect sole traders and individuals with self-employed income, including landlords and those who are employed, but have additional self-employed earnings (such as locums). Income generated from Limited Companies and Partnerships is not captured under the scheme.
We’ll help you navigate these changes with expert advice, practical solutions and hands-on support.
What is Making Tax Digital?
Making Tax Digital (MTD) is part of HMRC’s ongoing initiative to modernise and simplify the tax system. By moving to digital record-keeping and automated reporting, the government aims to make tax administration more efficient, reduce errors and ensure accurate reporting.
For many businesses and sole traders, this will be a significant change. If they haven’t already done so, they’ll need to adopt new digital practices and adjust how they handle their tax obligations.
This isn’t just about compliance; it’s about helping people and businesses embrace more efficient ways of managing their finances.
What are digital records?
Digital records refer to the electronic maintenance of your financial information – including income, expenses and other key transactions – in a format that is accurate, complete, and up-to-date.
What’s happening and when?
HMRC have written to most of those they expect to be impacted. Here’s what you need to know:
- April 2025: Sole traders and those with self-employed income can voluntarily start providing updates and implementing digital processes ahead of the mandatory deadline
- April 2026: MTD becomes mandatory for sole traders with an annual income of £50,000 or more in their 2024/2025 tax return
- April 2027: The threshold is reduced to £30,000 in their 2025/26 tax return
- April 2028: The threshold is reduced to £20,000 in their 2026/27 tax return.
How will this affect you?
If you’re a business owner or sole trader with income from property or other business activities, MTD could change the way you manage your tax.
Key requirements include:
- Keeping digital records of your business income and expenses
- Sending quarterly updates to HMRC using MTD-compatible software
- Filing your tax return digitally (remember: You’ll be making a total of five submissions each tax year – four quarterly updates plus your end-of-year tax return).
If your combined income from self-employment and property exceeds £50,000 for the 2024/25 tax year, you’ll need to comply from April 2026.
What do you need to do now?
The earlier you prepare, the more likely you are to be in the best position possible come April. Here’s how to start preparing:
Understand your income threshold
Look at your combined income from self-employment and property (UK and international) for the 2024/25 tax year. If it exceeds £50,000, you’ll need to comply with MTD by April 2026.
Choose the right software
You’ll need HMRC-approved software that can handle digital record-keeping, quarterly updates and tax return submissions. We can help you find the right solution.
Get expert support
We’re here to guide you through every step of the process, from assessing your eligibility to setting up and using the right tools.
How we can help
We understand that tax changes can be daunting. That’s why we’re here to make the transition as seamless as possible.
We’ll help you:
- Assess whether MTD applies to you
- Recommend and implement suitable software
- Understand basic bookkeeping and how to use MTD compliant software
- Handle ongoing record-keeping and quarterly updates on your behalf
- Ensure full compliance with HMRC’s requirements
This material is published for the information of clients. It provides only an overview of the regulations in force at the date thereof, and are subject to change without notice. No action should be taken without consulting the detailed legislation or seeking professional advice. Therefore no responsibility for loss occasioned by any person acting or refraining from action as a result of the material can be accepted by the authors or MIB or any of its associated businesses.