Making Tax Digital (MTD) & How It Affects Individuals

Managing Taxes Through Your Mobile Devices.

Making Tax Digital (MTD) is part of HMRC’s plan to modernise the UK tax system. If you receive income from the required sources and above a specific amount, you will be required to file quarterly using digital record-keeping and online submissions.

Let’s take a closer look at Making Tax Digital (MTD) & How It Affects Individuals to help you prepare.

What Is MTD?

MTD replaces the traditional Self Assessment tax return with a digital approach. You’ll need to keep your income and expense records digitally, not on paper. You will also submit updates to HMRC quarterly instead of just once a year.

Keeping Digital Records

Under MTD, you’ll need to maintain digital records of your financial activity. This includes self-employed income, rental income, and allowable expenses. You should use MTD-compatible software for this purpose. You won’t need to scan every receipt, but your records must be stored digitally. This allows them to be reported electronically to HMRC.

Who Does It Affect?

MTD is being introduced gradually for individuals:

• From April 2026: Self-employed individuals and landlords with total income over £50,000 must join MTD for Income Tax Self-Assessment (MTD for ITSA).

• From April 2027: Those with income between £30,000 and £50,000 will also be required to comply.

• From April 2028: Those with income above £20,000 will be required to comply.

  
  

HMRC is currently reviewing when (or if) MTD will extend to individuals with income below £20,000.

What Will Change for You?

Once MTD applies, you’ll need to:

• Submit quarterly digital updates to HMRC with your income and expenses.

• Complete a final declaration each tax year to confirm your overall income and tax liability.

  
  

Preparing for MTD

If you’re self-employed or receive rental income, now is the perfect time to prepare. Moving to digital record-keeping early will make the transition more seamless and help you stay compliant.

Making Tax Digital (MTD) & How It Affects Individuals Checklist

Keep these points handy as an easy access reminder:

1. Write down the date it starts for you.

2. Find suitable digital software ahead of your start date.

3. Write down your quarterly submission dates to ensure you submit everything in time.

4. Keep all your records in date order to make preparation easier.

   
   

If you feel this is getting complicated and time-consuming, we can manage all of this for you and ensure you’re ready when MTD comes into force.

Understanding the Benefits of MTD

MTD is not just a regulatory change; it also offers several benefits. By adopting a digital approach, you can streamline your tax processes. This means less time spent on paperwork and more time focusing on your business or investments.

Improved Accuracy

One of the significant advantages of MTD is improved accuracy. Digital record-keeping reduces the chances of human error. You can easily track your income and expenses, ensuring that you report the correct figures to HMRC. This can help you avoid costly mistakes and potential penalties.

Real-Time Insights

MTD allows for real-time insights into your financial situation. With digital tools, you can monitor your income and expenses as they happen. This means you can make informed decisions about your finances throughout the year, rather than waiting until the end of the tax year.

Easier Compliance

With MTD, compliance becomes easier. The digital systems are designed to guide you through the process. They often include features that remind you of upcoming deadlines and help you prepare your submissions. This can significantly reduce the stress associated with tax season.

Staying Ahead of Changes

As tax regulations evolve, staying ahead of changes is crucial. MTD is part of a broader trend towards digitisation in finance. By embracing these changes now, you position yourself to adapt more easily to future developments in tax legislation.

Final Thoughts

Making Tax Digital is a significant shift in how we handle taxes in the UK. While it may seem daunting at first, the benefits of improved accuracy, real-time insights, and easier compliance are worth the effort.

If you need assistance navigating these changes, remember that help is available. You don’t have to tackle this alone. Embrace the digital future of tax management and ensure you’re prepared for the upcoming changes.

If you feel overwhelmed, consider reaching out for professional advice. We can help you manage your tax affairs effectively, ensuring you meet all requirements under MTD.

By taking proactive steps now, you can minimise your tax liabilities and preserve your wealth. Let’s make this transition together!