What's Making Tax Digitial?

What’s Making Tax Digital? It’s your new best friend—or at least, it’s about to be!

Making Tax Digital (MTD) is the government’s way of helping you stay on top of your tax without the last-minute panic. Forget the old-school annual tax return scramble—MTD means sharing your tax info with HMRC more regularly throughout the year, so everything stays up-to-date.

Right now, MTD is already mandatory for businesses with a taxable turnover over £90,000. By 6 April 2026, MTD will apply to income tax for sole traders and landlords with higher incomes. And for corporation tax? That’s still in the works, but it's coming.

So, let’s break it down:

MTD for VAT

If you’re VAT-registered and your business pulls in over £90,000 a year, you’re already in the MTD club. You need to keep your records digitally (think Free Agent or another MTD-compatible software) and file your VAT returns that way too. Not there yet? You can still join voluntarily, and honestly, it’s not a bad idea to get ahead of the game. Using digital records for VAT is all about staying organized—keep track of your invoices, VAT rates, and make sure you’re compliant with HMRC.

MTD for Income Tax

Self-employed? A landlord? If your earnings are over £50,000, MTD for income tax is coming for you from April 2026 (and for those earning over £30,000, it kicks in April 2027). But don’t wait until the last minute! Start using an MTD-compatible software like Free Agent now, so you can get used to it. This way, when the deadline hits, you’ll already be ahead of the game. Plus, keeping digital records is just smart business—it helps you track your finances in real time.

What will you need to send to HMRC? Quarterly updates on your income and expenses, plus a final year-end declaration. No more tax return headaches!

MTD for Corporation Tax

MTD for corporation tax is still a work-in-progress, so there’s no deadline yet. But it’s only a matter of time. Get ready now by ensuring your records are kept digitally—it’ll save you a lot of hassle when the time comes.

How Can an Accountant Help with MTD?

Making Tax Digital is evolving, and it’s your responsibility to stay on top of it. But you don’t have to go it alone! An accountant can handle all the nitty-gritty details for you—keeping you compliant, up-to-date, and stress-free. They’ll help you get set up with the right software and take care of the regular reporting, so you can focus on what really matters—your business!

FAQs on Making Tax Digital

What’s the point of MTD?
MTD is HMRC’s way of making sure individuals and businesses get their tax right. Billions are lost each year due to errors, and MTD is here to fix that.

Will MTD mean extra reporting to HMRC?
Yes, but it’s not as bad as it sounds. More frequent updates mean you’ll be on top of your finances year-round, so no more last-minute stress!

Are there any benefits for me?
Absolutely! MTD helps you keep a clearer picture of your finances and even gives you an early estimate of your tax bill, so you can budget and avoid nasty surprises at the end of the year.

Do I need special software for MTD?
Yes. You’ll need MTD-compatible software like Free agent to submit your information to HMRC. Don’t worry if you’re unsure—your accountant can help with this!

Is MTD compulsory?
It is for VAT-registered businesses, and it will be for income tax starting in April 2026 for high earners. Corporation tax? That’s coming soon too.

Can I be exempt from MTD?
In some cases, yes. If it’s not practical for you to use digital software due to reasons like age, disability, or location, HMRC may grant an exemption. You’ll need to explain your situation to HMRC and see if you qualify.

MTD is here to make your tax life easier, so embrace the change. With the right tools—and maybe a little help from an accountant—you’ll be cruising through tax season without breaking a sweat!

Who Are Kernow Accountancy?

Kernow Accountancy is a family-run business that uses advanced technology to support your company. Our team of accountants and bookkeepers handles your finances so you can focus on growing your business.