If you’re self-employed, you’ve probably heard about Making Tax Digital (or MTD, as it’s often called). It’s one of the biggest changes to Self Assessment in decades, so here’s what you need to know.
Making Tax Digital is HMRC’s new system for sole traders (and landlords) to report their income and expenses. Think of it as Self Assessment’s digital-savvy younger sibling.
Instead of filing one big tax return at the end of the year, MTD asks you to keep digital records throughout the year and send quarterly updates to HMRC using MTD-compatible software (like Hnry!).
What exactly does MTD involve?
Great question! Three main things, really.
First up, you’ll need to keep digital records of all your income and expenses. No more shoebox receipts!
Secondly, you’ll send quarterly updates to HMRC using MTD-compatible software, showing what you’ve earned and spent over the previous three months.
Finally, you’ll still need to submit your annual tax return, but this time through your MTD-compatible software rather than the usual HMRC Self-Assessment portal.
It’s quite a shift from how things currently work! But the idea is that breaking everything down into quarterly chunks should actually make life easier in the long run. Rather than scrambling to piece together a whole year’s worth of transactions by the January filing deadline, you’re keeping on top of things as you go.
Who needs to use Making Tax Digital?
MTD is being rolled out gradually based on your turnover (that’s your total income before expenses, by the way).
If you earn £50,000 or more from self-employment and property combined, you’ll need to start using MTD from April 2026. That threshold drops to £30,000 from April 2027, and £20,000 from April 2028.
If you earn below £20,000 you’re exempt for now, though that could change down the line.
When are MTD quarterly updates due?
The tax year splits into four quarters, and you’ll need to submit an update on the 7th of the month after each quarter ends. So:
| Tax quarter dates | Update due | |
|---|---|---|
| Q1 | 6 April to 5 July | 7 August |
| Q2 | 6 July to 5 October | 7 November |
| Q3 | 6 October to 5 January | 7 February |
| Q4 | 6 January to 5 April | 7 May |
Your final tax return deadline stays the same though – 31 January following the end of the tax year.
What about MTD-compatible software?
This is where things get interesting! To use Making Tax Digital, you’ll need software that can keep digital records and submit information directly to HMRC.
There are loads of options out there, from full software that handles everything from start to finish, to bridging software that connects your existing spreadsheets to HMRC’s system.
Of course, we do have to mention that Hnry is fully MTD-compatible! But more than that, we handle all your tax calculations, payments, and returns automatically – including your quarterly MTD updates when the time comes. It’s all part of our 1% +VAT fee.
Making Tax Digital represents the biggest change to Self Assessment in decades, but with the right software in your corner (*cough* Hnry *cough cough*), the transition should be pretty smooth.
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