The UK tax system is undergoing a major transformation through Making Tax Digital (MTD), HMRC’s initiative to make tax administration more effective, efficient, and easier for taxpayers. While the changes bring long-term benefits, they also create new responsibilities for businesses, landlords, and individuals.
At Griffith Accountants Ltd, we are here to guide you through every stage of MTD, ensuring you remain compliant without the stress.
What Is Making Tax Digital?
Making Tax Digital is HMRC’s plan to move the UK tax system fully online. Instead of annual returns, taxpayers will need to keep digital records and submit updates through MTD-compatible software.
Currently, MTD applies to:
- Making Tax Digital for VAT: All VAT-registered businesses must now keep digital records and file VAT returns using MTD-compatible software.
- Making Tax Digital for Income Tax: You will need to use Making Tax Digital for Income Tax if you are a sole trader or a landlord registered for Self Assessment and your qualifying income exceeds a certain threshold. If your qualifying income is over:
- £50,000 for the 2024 to 2025 tax year, you will need to use it from 6 April 2026
- £30,000 for the 2025 to 2026 tax year, you will need to use it from 6 April 2027
- £20,000 for the 2026 to 2027 tax year, the government has set out plans to introduce legislation to lower the qualifying income threshold
This means paper returns and non-digital submissions will no longer be accepted.
What Does MTD Require?
To comply with MTD, you will need to:
- Keep digital business records – No more manual spreadsheets or paper receipts
- Use MTD-compatible software – Such as QuickBooks, Xero, or Sage, to record and send tax information
- Submit updates quarterly – Instead of one annual tax return, you will send more frequent updates to HMRC
Penalties for Non-Compliance
HMRC will introduce a points-based penalty system for late submissions. Each missed deadline earns a point, and reaching a points threshold will result in fines. In addition, late payments of tax may attract interest charges.
See more on GOV.UKHow Griffith Accountants Ltd Can Help
Navigating MTD requirements can feel overwhelming, but that is where we come in. At Griffith Accountants Ltd, we provide expert support to ensure you are fully prepared. Our services include:
- MTD software setup – We will help you choose and implement the right MTD-compatible software for your business.
- Digital record-keeping support – Training and guidance to keep your records compliant.
- Quarterly submissions – We can handle the entire reporting process, so you never miss a deadline.
- Ongoing advice and planning – Helping you understand what MTD means for your tax liabilities and cash flow.
- Full compliance checks – Reviewing your systems and processes to make sure you are audit-ready.
Why Act Now?
Although MTD for Income Tax does not come into force until 2026, preparing early will make the transition smoother. Businesses already registered for VAT should be fully MTD compliant now, and the lessons learned can give you an advantage when the wider rollout arrives.
Final Thoughts
Making Tax Digital is here to stay, and it will transform the way taxpayers interact with HMRC. By working with Griffith Accountants Ltd, you will gain confidence that your records are accurate, your submissions are timely, and your tax affairs are in safe hands.
📞 Contact us today to discuss how we can help you embrace MTD with confidence.