will making tax digital affect your business?
MTD is here, but you don't have to navigate it alone. Access clear, simple guidance in our MTD guide, specifically designed for sole traders and small businesses tackling digital tax reporting.
What Is Making Tax Digital?
Making Tax Digital (MTD) is an HMRC initiative designed to enhance digital tax reporting through the use of digital tools. Whether you are self-employed, manage a small business, or earn rental income, this MTD guide outlines how it will impact your record-keeping and submission of tax returns.
Who Does MTD Apply To?
MTD for VAT already applies to all VAT registered businesses, whether they are sole traders, partnerships, or limited companies. If your business is VAT registered, you should already be keeping digital records and submitting VAT returns using compatible software as part of your digital tax reporting process.
MTD for Income Tax:
The MTD guide details that MTD for Income Tax is being introduced in stages for:
From April 2026 - Self-employed individuals with qualifying income over £50,000.
From April 2027 - Self-employed individuals and landlords with qualifying income over £30,000.
From April 2028 - Self-employed individuals and landlords with qualifying income over £20,000.
Get the free guide: Free PDF MTD Guide for Sole Traders
Covers what MTD means, deadlines, and how to prepare step by step in this comprehensive MTD guide for digital tax reporting.
✅ Clear explanations
✅ Tailored for non-VAT-registered small businesses
✅ Easily understandable
MTD - Frequently Asked Questions
Please reach us at hello@sandersledgersolutions if you cannot find an answer to your question.
A: Not yet — but you will.
MTD for Income Tax (MTD for ITSA) will become mandatory from April 2027 for sole traders and landlords with income over £50,000. Those earning between £30,000–£50,000 are expected to be included from April 2028. If your income is under that, MTD will apply later, but it’s still wise to prepare now.
A: No — income (or turnover) refers to your total sales before expenses, not what’s left after costs.
Even if your profit is low or you’re in loss, if your gross income exceeds £50,000, MTD will apply from 2027.
A: Not exactly. Under MTD, you’ll submit quarterly updates to HMRC — but these are not full tax returns.
They’re summaries of your business income and expenses for that 3-month period. A final end-of-year submission (like your current tax return) will still be required.
A: Only if they’re linked to compatible bridging software.
Under MTD, your records must be digitally maintained and submitted. A basic spreadsheet is no longer enough unless it connects to HMRC-approved software that handles MTD submissions.
A: Once you’re in, you stay in, unless your income stays below the threshold for 3 consecutive tax years.
So even if your income drops one year, MTD will still apply.
A: Yes — getting used to digital record-keeping and quarterly updates before it becomes mandatory will make your transition smoother.
Plus, it gives you better visibility of your finances throughout the year, not just at tax time.