Making Tax Digital for Income Tax has arrived. If you are a sole trader, in the trades, or a landlord, it changes how often you report your income to HMRC, from once a year to four times a year. On your own it can be a headache, so let us take it off your plate. When you ring, you speak to Bobby directly; we do not use a call centre. Fees are fixed and agreed in advance, so there are no unexpected bills, and within five minutes we can tell you where you stand.
Making Tax Digital for Income Tax, which you'll see called MTD for ITSA, is HMRC's new way of running Self Assessment. Instead of doing one tax return once a year, you keep your records digitally and send HMRC a short summary of your income and expenses every three months. Then, after the tax year ends, you finish off with a year-end declaration that replaces the old tax return.
It is worth saying at the outset that the change is to how often you report. Your tax bill is worked out in the same way as before, and the dates on which you hand money over to HMRC do not move. The extra administration is the only new thing, and that is the part we are happy to take off your hands.
Most sole traders have also been on what is called the 'cash basis' by default since April 2024, and landlords default to it too. On the cash basis you count income when the money lands in your account and expenses when you pay them, so there are no complicated year-end adjustments to make. In practice your quarterly summary is a record of money in and money out, which makes it simpler than it first sounds.
It is being brought in gradually, in bands according to how much you earn. The first group, anyone with income over £50,000, has been in it since 6 April 2026, and the lower income bands follow over the next couple of years. For most people, then, it is a question of when they will be brought in. If you send us last year's figures we can tell you in a five-minute chat where you stand, and we will take it from there.
MTD for Income Tax applies to individual sole traders and landlords who fill in a Self Assessment return. Whether you're caught yet depends on your 'qualifying income', and that phrase trips a lot of people up. Qualifying income is your total gross turnover (the money coming in before you take off any expenses) from self-employment plus property, added together. It does not include your wages from a job, dividends, savings interest, pensions, capital gains or your share of a partnership. HMRC works it out from a tax return you've already filed, the one from two years before each start date, so it's based on figures you've already given them. If you are not sure which band you are in, send us last year's figures and we will tell you within five minutes where you stand and whether you need to do anything yet.
There are four update periods across the tax year, and each one has its own submission deadline about a month after the period ends. If you find you have entered a figure wrongly in an earlier update, there is no need to worry, because each update covers the whole year to date, so the correction is picked up in the next one and nothing is lost. Where we prepare your updates for you, we check the figures before they are sent in any case. The standard periods, and the date each update is due, are set out below. If it suits your bookkeeping better, you can choose 'calendar quarter' dates instead, ending 30 June, 30 September, 31 December and 31 March, and the four deadlines stay the same.
| Quarter | Period it covers | Submit by |
|---|---|---|
| Quarter 1 | 6 April – 5 July | 7 August |
| Quarter 2 | 6 July – 5 October | 7 November |
| Quarter 3 | 6 October – 5 January | 7 February |
| Quarter 4 | 6 January – 5 April | 7 May |
Every item of income and expense is recorded in HMRC-compatible software (or a spreadsheet linked to it), showing the amount, the date and the category. You do not have to scan every receipt and you can still keep the paper originals; it is only the figures that need to be held digitally. On the cash basis, those figures are what came in and what went out.
Four times a year you send HMRC a running total of your income and expenses. Each update is a summary of the totals only, so HMRC do not see individual invoices, and no tax is due at this point. Each business gets its own update, so if you have two trades and a rental property, for example, that is three sets of updates and twelve filings a year, all on the same four deadlines. That can sound like a great deal of work, and it is work we take on in full for our clients.
After 5 April you complete a year-end final declaration, which brings in everything else (your job, dividends, interest and pensions) together with your reliefs and allowances, to confirm the tax due for the year. It replaces the old Self Assessment return and is due by 31 January.
The dates on which you pay do not change. Your balancing payment and first payment on account are still due on 31 January, and the second payment on account on 31 July, and MTD does not ask you to pay tax quarterly.
Under MTD, your accounting records have to be kept electronically, in software or a spreadsheet. A shoebox of receipts or a paper cashbook won't meet the rules on its own once you're mandated. For each transaction you record three things: how much, the date, and the category (the same categories you'd use on a tax return). If you're on the cash basis, like most sole traders now are, that's money in and money out, with no fiddly adjustments.
People tend to worry most about their receipts, and in practice that is the smallest part of the work. Your receipts and invoices do not have to be scanned or digitised, and you can keep the paper originals in a drawer if you like. Only the figures from them need to be entered digitally, and if you are a client of ours that is a job we do for you.
Spreadsheets are still allowed, but a spreadsheet on its own can't send anything to HMRC. It needs a small piece of connecting software (HMRC calls it 'bridging software') to push the figures across. And if you use more than one program, the numbers have to flow between them automatically, without being retyped or copied by hand (HMRC calls that a 'digital link'). It is fiddly to set up, so we do that once at the start and then run it for you, and after that you should not need to think about bridging software at all.
HMRC no longer publishes a fixed list of approved software; there's a 'Find software' search tool instead. Well-known options include Xero, QuickBooks, Sage and FreeAgent, with bridging tools like 123 Sheets or VitalTax for spreadsheet fans. There are even free routes: FreeAgent is free for NatWest, Royal Bank of Scotland, Ulster Bank and Mettle business account holders. We will match you to the one that suits how you work, and there is no reason for that to be the most expensive option. We also check that HMRC recognises it for MTD for Income Tax, because some products are recognised for VAT only.
One more piece of plumbing we handle is getting HMRC to authorise us to act for you, so we can file your updates on your behalf. That is set up once at the start, and after that you do not need to log in and submit anything yourself, because we do the filing and you can get on with your work.
Keep your digital records and supporting documents for at least five years after the 31 January deadline for that year, broadly as Self Assessment has always required. We keep track of this for you as well.
HMRC toughened the penalties in 2025, so they are worth understanding. If your updates go in on time and your tax is paid, none of them will apply to you, and keeping you on the right side of them is a large part of what we are here to do. The position as it stands is set out below (the interest rate mentioned moves with the Bank of England base rate, so we always work to the current figure).
If we file everything for you, on time, none of this needs to concern you. If you would like to know the cost first, tell us a little about your work and we will agree a fixed fee before you commit to anything.
If you're a CIS subcontractor working as a sole trader, MTD applies to you in the same way as to any other sole trader, as there is no special exemption for the trades. The point that catches people out is the way your income is counted, because your qualifying income is the full amount you invoice before the 20% (or 30%) CIS deduction is taken off. So even though money lands in your account with tax already knocked off, HMRC looks at the gross figure, which means a lot of subbies are over the threshold sooner than they'd expect.
Your quarterly updates carry only your income and expense totals; the CIS tax that contractors deduct from you isn't reported in them. That deduction is still handled the old way by whoever pays you, and it gets picked up in your year-end tax calculation. If you are used to receiving a CIS refund because too much has been deducted at source, that refund will still come after your final declaration, as it does now, because the quarterly updates do not bring it forward.
We do this work every day from our base in Kent, keeping your digital records, filing your four updates, reconciling every penny of CIS deducted against your year-end bill, and making sure the refund you are owed is claimed correctly and comes through as quickly as it can, so that you can get on with the job on site while we look after the numbers.
Check my CIS refundVery few people start a business because they want to spend their evenings on bookkeeping, so our aim is to make MTD something you rarely need to think about. We set it up once at the start and then look after it all year round, and you can phone us whenever you have a question. If you are in the £50k group that is already live, the first quarterly update (Q1, covering the period that ended 5 July) is due by 7 August 2026, so it is worth getting set up straight away. In practice the service covers the following.
We choose and set up HMRC-compatible cloud software that suits how you work, including free options if you qualify, connect it to your bank so records build themselves, and get HMRC to authorise us so we can file for you.
We prepare and submit all four updates a year for you before the deadline, with a separate set for each business if you run more than one, so you do not need to keep track of 7 August, 7 November, 7 February and 7 May yourself.
We bring in everything else (your wages, dividends, interest, reliefs and allowances), complete the final declaration that replaces your tax return, and confirm what's due.
We reconcile every CIS deduction against your year-end liability and claim the refund you're owed correctly, so subbies get the right result without chasing paperwork.
We keep you on the right side of HMRC's tougher penalty rules by filing on time, and we tell you in good time how much tax to set aside, so that the January bill does not come as a surprise.
You deal directly with Bobby Gardiner; we do not use a call centre. Fees are agreed in advance so you always know the cost, and there is no charge for asking a question. If you would like to start, call Bobby directly or ask us for a fixed quote.
If your gross self-employment and/or property income is over £50,000 it's already mandatory, having gone live on 6 April 2026. The £30,000 group joins from April 2027 and the £20,000 group from April 2028. HMRC usually writes to people who are caught, but if no letter arrives it's still your responsibility to check, so it's worth a quick call to us to confirm where you stand. If you're in the £30k or £20k groups, you can also volunteer to join early to get used to it before it becomes compulsory, and we will run a practice quarter with you so that the first live filing is straightforward.
No, and it is the point most people get wrong. Qualifying income is your gross turnover (the total money coming in before you deduct any expenses) from self-employment plus property, added together. It does not include wages from a job, dividends, savings interest, pensions, capital gains or a partnership share, so you can be over the threshold on turnover even if your profit is modest.
Yes, on the same basis as any sole trader; there's no CIS exemption. Importantly, your income is measured on the full amount you invoice before the 20% or 30% CIS deduction, so many subbies cross the threshold sooner than expected. We work with CIS subcontractors all the time and can make the whole process straightforward for you.
No, and you should be wary of anyone who says it will. The CIS tax deducted from you does not appear in the quarterly updates at all. That tax is reconciled in your year-end tax calculation instead, so any refund still comes after your final declaration, just as it does now. Our part is to make sure that every penny deducted is captured, so that your refund is claimed correctly and comes through as quickly as it can.
MTD covers rental income from UK and overseas property (including what used to be called furnished holiday lets). The figure tested is the rent coming in, before you take off mortgage interest, agent fees or repairs, so plenty of landlords are over £50k on paper even when the profit is slim. If you are also self-employed, both gross incomes are added together for the threshold test. If you own a property jointly, only your share of the rent counts. Each separate property business needs its own quarterly update, although for jointly-owned property there is a lighter-touch option under which you report your share of the rental income each quarter and add the expense detail at the final declaration. With three flats and a joint owner that is a fair amount of administration, and it is all administration we take care of for you.
No, and for most people that comes as the biggest relief. MTD changes how often you report to HMRC, and your payment dates are unchanged: the balancing payment and first payment on account are due on 31 January, and the second payment on account on 31 July, just as now.
No. Your receipts and invoices can stay on paper, because there is no requirement to scan or digitise them. Only the figures from them (the amount, date and category) have to be recorded digitally, and if you are a client of ours we enter those figures for you.
Yes, but a spreadsheet alone cannot send anything to HMRC. It needs a small piece of connecting software (HMRC calls it 'bridging software') to submit your updates, and any data moving between programs has to flow automatically without being retyped. It is fiddly to set up, so we set the whole chain up for you and run it from then on.
HMRC no longer names specific products (there's a 'Find software' tool instead), but well-known options include Xero, QuickBooks, Sage and FreeAgent. There are free routes too: FreeAgent is free for NatWest, RBS, Ulster Bank and Mettle business account holders. We will match you to the tool that suits your business, and there is no reason for that to be the most expensive one. We also make sure it is recognised for MTD for Income Tax, because some products are recognised for VAT only.
Late updates use a points system: one point per missed deadline, and at four points you get a £200 penalty, then £200 for each further late one. Late payment carries its own charges plus interest at the Bank of England base rate plus 4% (7.75% at the time of writing, though it moves with the base rate). There's a first-year easement on late-update points for the April 2026 group, but it doesn't cover the final declaration. The simplest way to avoid all of this is to let us file everything on time.
Not in your capacity as a director. Limited companies fall under Corporation Tax, and a director's salary and dividends don't count as qualifying income. But if you personally have self-employment or rental income over the threshold, you'd be caught on those sources, so it's worth checking your own position with us.
Some people are automatically out of scope, with nothing to apply for. For example, if your qualifying income is £20,000 or under, or you don't yet have a National Insurance number by the start of the tax year (that test is judged at 6 April, so even getting a number shortly after can still leave you out for that year). Others have to apply, most commonly people who are 'digitally excluded' through age, disability, location or beliefs. HMRC aims to respond to those applications within 28 calendar days, and you get 30 days to appeal if you're refused. These are edge cases, so please check with us before assuming an exemption applies. Either way, exempt taxpayers still file a normal Self Assessment return, and we can check whether any exemption fits you and handle the application if it does.
Book a free, no-obligation review. We'll get you on the right software, keep every quarterly update filed, and handle HMRC, so you never think about it.
