After years of the Government moving the launch date and generally being very vague about details, Making Tax Digital is finally happening, and it starts in April 2026! We’ve being doing our research and speaking directly with HMRC, software providers, and industry gurus. The team at Hancox now feel fully informed and ready to help our clients navigate what is possibly the biggest change to the accounting and tax industry since Self-Assessment came in back in 1998.
Please take the time to read this guide to see if / when MTD applies to you. We hope it make things a little clearer, but we do acknowledge it may also raise a lot of questions for you and how you manage your business finances and paperwork. We will be in touch to discuss how we can help you comply with MTD later in the year. Please don’t worry or panic, but be prepared that change is coming.
Who it affects?
✅Self-employed Sole Traders
✅Landlords, including those with jointly owned properties
❌ Partnerships
❌ Limited Companies
Are you on HMRCs list?
HMRC are currently writing to those taxpayers it believes will be need to comply with MTD in April 2026. They are basing this on the information submitted on the 2024 Tax Returns. However, it will be the figures declared on the 2025 Tax Return which will be used for mandation.
What is MTD?
💻 CREATE & KEEP DIGITAL RECORDS.
MTD is a legal obligation for sole traders and landlords to create and keep digital bookkeeping records, using software such as QuickBooks.
✅ SUBMIT QUARTERLY REPORTS TO HMRC.
Simple but accurate income and expense reports need to be submitted every 3 months to HMRC, via MTD compliant software.
📰DOES NOT REPLACE TAX RETURNS.
MTD is in addition to Self-Assessment. The Tax Return, the 31st January filing deadline, and when payments are due will not change.
When does it come in?
The total turnover from sole trade and / or rental income will determine when you will be part of MTD.
What will be required?
As well as the obligation to create and keep digital bookkeeping records, sole traders and landlords must submit quarterly reports to HMRC. The four reports are aligned with the tax year, and are the same for everyone.
There is a 5 week window after the month end to get bookkeeping records up to date and file the MTD report. This does mean keeping your invoices, expense receipts and bookkeeping records up-to-date will be vital to avoid HMRC penalties.
Whilst these reports need to be an accurate reflection of income and expenses, they don’t account for every element of accounting and tax, or other income streams (such as employment income, savings interest).
VAT registered sole-traders are required to file quarterly MTD reports in addition to the quarterly VAT returns.
What HMRC have to say…
Please note, the information provided above is based on current guidance from HMRC and may be subject to change. Please contact us before making any big decisions or taking any action.
Page last updated 19 June 2025
