Making Tax Digital 2025–2026: A Complete UK Guide for Small Business Owners & Landlords
Home / Post Detail
Making Tax Digital (MTD) is entering its next major phase — and if you’re a sole trader, landlord, small business owner or company director, the rules will soon affect how you manage your tax return, self-employment tax return, VAT return, payroll services, company accounts and company tax return.
As your trusted small business accountant and online accountant, AM Accountex Ltd brings you a clear, SEO-optimised guide on everything you need to know before April 2026.
What Is Making Tax Digital for Income Tax (MTD ITSA)?
Making Tax Digital is the UK government’s digital transformation of the tax system. Initially launched for VAT, it will now extend to Income Tax Self Assessment (ITSA) for:
- Self-employed individuals
- Landlords with rental income
Under MTD ITSA, you must:
- Keep digital financial records through HMRC-approved accounting software.
- Submit quarterly updates of income and expenses instead of one annual submission.
- Complete a Final Declaration, replacing the traditional tax return but based on the digital updates.
This change ensures real-time accuracy and reduces tax-year surprises.
Who Will Be Affected? Key Dates & Thresholds
MTD will apply based on your total gross income (self-employment + property income combined):
📌 From 6 April 2026
Individuals earning over £50,000 must join MTD for Income Tax.
📌 From 6 April 2027
Threshold lowers to more than £30,000.
📌 From 6 April 2028
Threshold becomes more than £20,000.
Even if you’re under the threshold, HMRC allows voluntary early sign-up — which can make the future transition easier.
How MTD Affects Different Types of Taxpayers
✔ Sole Traders
You will move from one annual self-employment tax return to quarterly digital submissions plus a final declaration.
✔ Landlords
If you receive rental income, it must be combined with self-employment income to assess MTD eligibility.
✔ Company Directors & Limited Companies
While MTD ITSA applies mainly to individuals, directors must still consider:
- Digital record-keeping for company accounts and company tax return
- Quarterly VAT submissions (if VAT-registered)
- Director tax return requirements
✔ VAT-Registered Businesses
If you’re already using MTD-compatible software for VAT return submissions, transitioning to MTD for Income Tax will be much easier.
MTD & Your Business Compliance: What It Means
As your dedicated online accountant, these are the areas where MTD impacts your operations:
- Tax return & self-employment tax return now require digital record-keeping
- Payroll services may need integration with cloud accounting
- Company accounts & company tax return require consistent digital processes
- VAT return submissions remain fully digital
- More frequent reporting means better bookkeeping discipline
Missing deadlines or incorrect submissions could lead to penalties.
What You Should Do Now – 5 Essential Steps
1️⃣ Check If You Fall Within the MTD Threshold
Add your self-employment income + property income from the last tax year.
2️⃣ Switch to MTD-Compatible Accounting Software
Spreadsheets alone may no longer comply. You need digital-linking capability.
3️⃣ Improve Your Bookkeeping Workflow
Real-time digital records will be mandatory — paper-based bookkeeping is not enough.
4️⃣ Prepare for Quarterly Updates
Start practising quarterly submissions now to avoid pressure later.
5️⃣ Work With a Qualified Small Business Accountant
AM Accountex Ltd can assess your system, recommend the right software, and manage the full transition.
Benefits & Risks of Making Tax Digital
⭐ Benefits
- Real-time overview of business finances
- Less year-end stress and fewer mistakes
- Better budgeting, tax planning and
- cash-flow management
⚠️ Risks if You Don’t Prepare
- Penalties for non-compliance
- Administrative overload
- Software and training costs if left too late
- Higher risk of errors without digital systems
How AM Accountex Ltd Helps You Become MTD-Ready
We specialise in helping small businesses, landlords and company directors transition smoothly into MTD through:
✔ Tax Return & Self-Employment Tax Return Services
Full preparation and submission with digital-compliance.
✔ Payroll Services
Accurate and compliant payroll management with cloud integration.
✔ Company Formation
Set up your new business with MTD-ready systems from day one.
✔ Company Accounts & Company Tax Return
Complete end-to-end digital accounting and corporation tax filing.
✔ VAT Returns
Fully compliant MTD for VAT submission and record-keeping.
✔ Director Tax Return
We ensure your personal tax affairs are efficient and correctly filed.
✔ MTD Implementation & Support
Software setup, data compatibility checks, quarterly submission support, and ongoing advisory.
Final Thoughts
MTD is not just a compliance requirement — it’s the future of tax reporting. Whether you’re managing a small business, rental property, payroll services, VAT return or company accounts, preparing early will save time, money and headaches.
AM Accountex Ltd is committed to guiding you through every step of the digital transition as your trusted small business accountant and online accountant.
