Making tax Digital (MTD)
A refreshingly different approach – Focusing on you, your wealth and your future
What is Making Tax Digital (MTD)?
Making Tax Digital will be part of HMRC’s flagship initiative to modernise the tax administration system in the UK. Its primary goal is to help eliminate the “tax gap” of errors resulting from manual calculation, misplaced receipts, and annual end-of-year tax returns by moving businesses and individuals to continuous digital record-keeping.
MTD rules require that taxpayers:
- Keep digital maintenance of all business and property income and expenditure.
- Use HMRC-friendly software (e.g. Xero, QuickBooks or bridging software that connects to spreadsheets).
- Report to HMRC four times a year the income and expenditure for the tax year.
- Submit Final Declaration by 31 January after the tax year – finalise tax position and claim allowances.
Key Deadlines for the 2026/27 Tax Year
If you are a sole trader or landlord with an income of more than £50,000, the first MTD tax year (6 April 2026 – 5 April 2027) will have a rigorously sequential timeline for submitting tax returns:
- Quarter 1 (6 April – 5 July): Update due 7 August 2026
- Quarter 2 (6 July – 5 October): Update due 7 November 2026
- Quarter 3 (6 October – 5 January): Update due 7 February 2027
- Quarter 4 (6 January – 5 April): Update due 7 May 2027
- Final Declaration & Tax Payment: Due 31 January 2028
HM Revenue & Customs (HMRC) has announced that there will be no immediate penalties for failing to provide quarterly updates in the transition year. After this, points-based penalty systems come into play, however, and digital readiness becomes essential.
MTD Timeline & Key Thresholds
Understanding whether MTD applies to you depends on your gross qualifying income (total sales/rental revenue before deducting expenses or tax allowances):
| Phase | Effective Date | Who is Affected? |
|---|---|---|
| MTD for VAT | April 2022 | All VAT-registered businesses (regardless of turnover). |
| MTD for ITSA (Phase 1) | April 2026 | Sole traders and landlords with gross qualifying income over £50,000. |
| MTD for ITSA (Phase 2) | April 2027 | Sole traders and landlords with gross qualifying income over £30,000. |
| MTD for ITSA (Phase 3) | April 2028 | Planned expansion for qualifying income over £20,000. |
Important Note on Corporation Tax: originally MTD was going to be available for limited companies but as with CT, HMRC’s recent update confirmed that MTD for Corporation Tax won’t be coming as planned. However, HMRC is establishing a new corporate structure.
To find out what the MTD changes are for your particular situation, and who they affect and what needs doing, check out our MTD dedicated guide: Making Tax Digital: What Has Changed, Who It Affects & What Needs Doing.
How Morgan Reach Navigates MTD For You
Administration issues arise when Self Assessment becomes a five interactions a year digital process.
The pressure of MTD is lifted at Morgan Reach as we provide you with a bespoke package of services according to your preference, from end-to-end or support for quarterly review and filing.
1. Digital Systems & Software Onboarding
- Software Implementation: We audit your existing bookkeeping setup and move you onto leading HMRC-recognised cloud platforms like Xero, QuickBooks, Zoho or FreeAgent.
- Bridging Solutions: For businesses using spreadsheets, we set up compliant digital links and bridging software so you can maintain your workflow without disruption.
2. Quarterly Updates & Compliance Management
- Data Verification: Before any quarterly submission to HMRC, our team reviews your digital ledger for potential errors, missing receipts, or miscategorised expenses.
- Quarterly Filings: We submit your 3-month income and expense summaries directly through HMRC’s digital API, keeping you clear of late submission points.
3. End-of-Year Tax Optimisation & Final Declaration
- Adjustments & Allowances: We factor in capital allowances, relief claims, and private-use adjustments at year-end.
- Final Submission: We file your Final Declaration alongside your total tax calculation by 31 January.
Meet the Experts Behind Your MTD Transition
Chartered accountants and cloud tax specialists are needed to navigate HMRC changes in legislation. We have a dedicated team that does digital tax onboarding every day for hundreds of sole traders, property investors and growing businesses throughout the UK. Learn more about our Meet Our Team Page and our specialists who are directly working with clients to make MTD compliance a breeze.
Get Ready for MTD Today
Key Information Summary
- What does the term “MTD” mean in Income Tax? HMRC plans to introduce digital record keeping and 4 quarterly summaries, in addition to a final declaration, for sole traders and landlords every year.
- From April 2026, who is covered? Self-employed people and those who receive property turnover income in excess of £50,000 per year.
- When is the first MTD deadline for the first quarter? August 7, 2026 (covering the period 6 April to 5 July).
- Is there any MTD guidance for Corporation Tax? No, HMRC confirmed that MTD for Corporation Tax will not be in the format it was originally planned in.
We provide personalised accounting service to businesses of all sizes across a huge variety of industries.
Don’t wait till the filing deadline to check your record-keeping systems. By being prepared, you’ll get your software connected and your business safe from any unhelpful penalties imposed by HMRC.
We understand business and how it works and have years of experience in helping businesses just like yours grow and become more profitable.
You can rely on our range of compliance services to be a safe pair of hands to keep you on the right track and avoid penalties for late payment or submission.
Tax investigations and tax regulations could prove to be challenging. That’s why our specialist Tax team is here help you with your tax decisions
Morgan Reach offers a service through which you can use our registered office address for your business and we can deal directly with any correspondence.
CHARTERED CERTIFIED ACCOUNTANTS
