Making Tax Digital 2026: What UK SMEs Need to Do Now

Making Tax Digital for Income Tax Self Assessment (MTD ITSA) is now live for sole traders and landlords with income over £50,000. If that's you, HMRC expects you to keep digital records and submit quarterly updates using compatible software.

Who Is Affected?

• Sole traders with gross income over £50,000 (from April 2026)
• Landlords with property income over £50,000 (from April 2026)
• Those earning over £30,000 will follow from April 2027

What Do You Need to Do?

1. Sign up for MTD ITSA — Register through your Government Gateway account
2. Choose compatible software — Xero, QuickBooks, FreeAgent and others are MTD-ready
3. Keep digital records — No more shoeboxes of receipts. All income and expenses must be recorded digitally
4. Submit quarterly updates — Every 3 months, submit a summary to HMRC through your software
5. File a final declaration — At year-end, confirm your figures and submit your tax return

What Happens If You Don't Comply?

HMRC has confirmed that penalties for non-compliance begin from July 2026. These include points-based penalties for late submissions and interest on late payments.

Our Advice

Don't wait. Even if you have an accountant handling your tax return, make sure they're set up for MTD. If you're not sure where you stand, we can help you assess your readiness in a 30-minute call.