Making Tax Digital (MTD) is the government's initiative to modernize the UK tax system. While MTD for VAT is now business as usual for most, MTD for Income Tax Self Assessment (ITSA) is on the horizon. Here is what you need to prepare.
Who is Affected?
From April 2026, self-employed individuals and landlords with an income of more than £50,000 will need to keep digital records and send quarterly updates to HMRC using compatible software.
The Benefits of Going Digital
While it requires a change in habits, digital record-keeping offers real-time visibility of your tax liability, reducing the shock of the annual tax bill. It also reduces errors and saves time on manual admin.
How to Prepare
- Review your software: Ensure you are using MTD-compatible accounting software like Xero or QuickBooks.
- Separate business and personal: Keep a dedicated business bank account to make digital reconciliation easier.
- Talk to your accountant: We can help you set up the right systems and train you on how to use them efficiently.
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