Insights
Case Study
Making Tax Digital
What is Making Tax Digital
Making Tax Digital (MTD) has finally arrived — after almost 10 years in the making by HMRC, the goal is simple: move away from annual paper-based tax returns and towards a more regular, digital approach to record keeping and reporting. MTD for Income Tax Self Assessment (MTD for ITSA) specifically affects sole traders and landlords. For sole traders, the changes started from April 2026.
In short: instead of one annual tax return, you’ll keep digital records and submit quarterly updates to HMRC throughout the year.
Who does it affect?
MTD for Income Tax applies to sole traders with gross income (turnover) above the relevant threshold. The rollout is being phased in as follows:
April 2026 – Sole traders or landlords with income over £50,000
April 2027 – Sole traders or landlords with income over £30,000
April 2028 – Sole traders or landlords with income over £20,000 (proposed)
Note: Income here means your gross business turnover — not your profit. If you have multiple sole trader businesses, HMRC will add the income from all of them together when assessing whether you meet the threshold.
What actually changes?
Under MTD for Income Tax, there are three key changes to how you manage your tax:
1. Digital Record Keeping
You must keep your income and expenses records digitally, using HMRC-compatible software.
2. Quarterly Updates
Instead of one annual return, you’ll submit a summary of your income and expenses to HMRC four times a year — once per quarter. These are not tax payments, just updates.
3. End of Year Declaration
After the four quarterly updates, you’ll still submit a final end of year declaration to confirm everything is correct and include any other income — replacing the current Self Assessment tax return.
The quarterly deadlines Quarter Period Submit by
Q1 6 April – 5 July 7 August
Q2 6 July – 5 October 7 November
Q3 6 October – 5 January 7 February
Q4 6 January – 5 April 7 May
What do you need to do?
The good news is that if you’re already working with us, you’re in safe hands. Here’s a simple overview of what preparation looks like:
Step 1
Check whether your income exceeds the threshold for April 2026 (£50,000 gross turnover from your 2024/25 tax year return) and sign up for MTD, or we can sign you up as your agent.
Step 2
Ensure you’re using HMRC-compatible software — Xero is fully MTD-ready and our platform of choice (www.xero.com).
Step 3
Get into the habit of keeping your records up to date throughout the year, not just at year end.
Step 4
Talk to us — we can review your current setup and make sure you’re fully prepared well ahead of the deadline.
Why Xero makes MTD straightforward
Xero is fully compatible with HMRC’s MTD requirements. It keeps your records organised in real time, generates your quarterly summaries automatically, and submits directly to HMRC — no manual form filling, no scrambling at year end. As Xero experts, we’re already helping clients get set up for MTD ahead of the April 2026 deadline — and we’d love to help you too. From quarterly submissions to year-end accounts, payroll, and tax planning, we’re much more than just compliance. Get in touch and let’s get you ready.
Get in touch with the team at Malone Accounting today.
We’ll review your current setup, answer your questions, and make sure you’re fully prepared — with no last-minute panic.
Give us a call to discuss your accounts – 
028 4372 3743
If you want a forward thinking, digitally focused accountant who helps you understand your numbers, save tax and make better financial decisions, we would be happy to talk.