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What is Making Tax Digital?
Making Tax Digital (MTD) is a UK government initiative designed to modernise the tax system by requiring businesses and individuals to keep digital records and submit tax information to HMRC using approved software. The goal is to make tax administration more effective, efficient, and easier for taxpayers. MTD replaces traditional paper-based processes with a streamlined digital approach, aiming to reduce errors and improve compliance. It initially focused on VAT but is expanding to include Income Tax and eventually Corporation Tax, forming part of HMRC’s broader vision for a fully digital tax system.
As of now, MTD for Income Tax Self Assessment (ITSA) will apply from April 2026 to sole traders and landlords with income over £50,000, and from April 2027 for those earning over £30,000.
How Will It Affect Businesses?
DIGITAL RECORDS
Sole traders will need to keep their business records digitally using MTD-compatible software or spreadsheets that can link to HMRC systems.
QUARTERLY UPDATES
Instead of filing an annual Self Assessment return, they must submit quarterly income and expense updates to HMRC.
FINAL DECLARATION
At the end of the tax year, a final declaration (similar to the current Self Assessment) will still be required, confirming the business’s overall income.
SOFTWARE COSTS
Many sole traders may need to invest in new accounting software or upgrade existing systems to comply with MTD requirements.
How Can We Help You?
DIGITAL RECORDS
Salter Financial Ltd can create a bespoke app, tailored to your business requirements and compliant with MTD regulations.
QUARTERLY UPDATES
Without any need for time consuming meetings, we can file quarterly updates automatically using the figures entered into your bookkeeping system.
FINAL DECLARATION
After a quick chat at the end of the tax year, we can file your final declaration and other tax related matters.
SOFTWARE COSTS
Using either our bespoke app or spreadsheet, we can use bridging software to link to HMRC and remain MTD compliant. No need for any extra costs!
EXAMPLE
Enter your earnings weekly / monthly / quarterly into our bookkeeping app
The App stores all of your transactions, previous accounts and estimates future tax obligations
This syncs directly to a database our end. No need for lengthy meetings
We take care of all of your quarterly updates and final declaration
