Making Tax Digital (MTD) for Income Tax

What is Making Tax Digital (MTD) for Income Tax?

Making Tax Digital (MTD) for Income Tax is a new initiative introduced by HMRC aimed at simplifying and streamlining how self-employed individuals, landlords, and businesses file their income tax returns. Under this system, taxpayers will no longer be required to submit their tax returns at the end of the tax year. Instead, they will be required to report their income and expenses quarterly, making the process more accurate, timely, transparent (and stressful!).

MTD for Income Tax will help you stay on top of your tax obligations, allowing you to pay the right amount of tax at the right time. At Theataccounts, we specialise in guiding individuals and businesses through this transition to digital tax reporting, ensuring compliance and making the process as smooth as possible.

Key Features of MTD for Income Tax

1. Quarterly Updates: Instead of filing one tax return annually, you will need to submit updates to HMRC every three months. This will ensure your income and expenses are tracked in real time, improving accuracy and avoiding year-end surprises.
2. Digital Record Keeping: MTD for Income Tax requires individuals and businesses to maintain digital records of income and expenses. This eliminates the need for paper-based records, reducing the chances of errors and ensuring compliance with the new regulations.
3. Real-Time Tax Position: With MTD, you will have a better view of your tax position throughout the year. By submitting quarterly updates, you’ll have a clearer idea of how much tax you owe or how much tax you are owed, reducing the chance of last-minute financial surprises at the end of the tax year.
4. Automatic Calculations: MTD-compliant software will calculate your tax liabilities automatically based on the income and expenses you submit. This reduces the burden of manual calculations and ensures that your filings are precise.
5. Software: The software will only calculate your tax position based on the information input. It will never replace the expertise of an accountant, especially one with such experience in the entertainment sector.

How MTD for Income Tax Can Benefit You or Your Business 

• Improved Cash Flow Management: By reporting quarterly, you will have a clearer understanding of your tax obligations throughout the year. This enables you to manage your cash flow more effectively.
• Greater Transparency: With MTD, you will be able to track your income and expenses, and tax liabilities in real time. This transparency makes it easier to plan your finances.
• Seamless Integration with Accounting Software: MTD for Income Tax will integrate with accounting software that automatically updates your financial records. This ensures your information is up-to-date and ready for submission whenever you need it.

How Theataccounts Can Help with MTD for Income Tax

At Theataccounts, we fully appreciate the added stress MTD will bring, and we will continue to offer a comprehensive service to guide you through the process of MTD for Income Tax. Our expertise which ensure you are fully compliant whilst also paying the correct amount of tax.

• MTD for Income Tax Registration: We’ll help you register for MTD, ensuring that you meet all the HMRC requirements for digital record-keeping and quarterly submissions.
• Software Integration and Setup: Our team will help you choose and integrate MTD-compliant software that suits your business or personal needs. We ensure that your system is set up correctly to make digital filing as seamless as possible.
• Ongoing Support: As MTD for Income Tax evolves, we will provide ongoing support to keep you updated on any changes to the rules and ensure you remain compliant.
• Quarterly Submission Assistance: We handle your quarterly updates to HMRC, ensuring that your filings are timely, accurate, and compliant with MTD regulations. Let us take care of the technicalities so you can focus on running your business.
• Tax Planning Advice: Beyond just filing your taxes, we offer expert tax planning services to help you optimise your tax position, manage cash flow, and reduce your overall tax liability.

Get Ready for MTD for Income Tax Today

For individuals, MTD for ITSA will be introduced in two phases:

• from April 2026, for those with qualifying income over £50,000
  
• from April 2027, for those with qualifying income over £30,000
  

Qualifying income is based on business or property income, reported on your 2025 tax return. If you are unsure if you are effected, please get in touch.

Theataccounts understand that the transition to digital tax filing can feel overwhelming, but with our expert guidance, you can be confident that your tax affairs are in safe hands.

Contact us to learn how we can help you navigate the MTD for Income Tax process and ensure your tax filings are accurate, timely, and fully compliant.