Call: 01904 488747
•
email: info@mollan.co.uk
This article is regularly updated to reflect industry standards and requirements. Come back later to keep updated with Making Tax Digital developments.
When handling your company’s financial processes – bookkeeping, tax planning, and others – it’s vital to be aware of the Government’s Making Tax Digital (MTD) movement.
Yes, it’s going to be compulsory to process financial transactions this way. But, actually, it does help with admin tasks around tax by streamlining some processes, uncovering growth opportunities, and making bookkeeping generally easier.
Today, we are taking a closer look at the practicalities of digitising your tax processes and the values of improving tax bookkeeping and transactions with cloud accounting.
Contact Mollan today for a detailed consultation with no fees or obligations.
Making Tax Digital (MTD) is a UK government initiative designed to change tax processes by making them entirely digital.
It aims to streamline accounting, make bookkeeping more accurate, and help small business be tax law compliant. It’ll do this by removing paperwork, minimising human error and lessening administrative burden all round.
Making Tax Digital is designed to digitise tax record-keeping, payments, and data submission. And it is compulsory for businesses in the UK, though HMRC intends to expand the scheme to include other business tax forms.
There are many benefits to Making Tax Digital, including:
Making Tax Digital is mandatory for the majority of businesses and individuals across the UK, depending on circumstances and annual turnover.
Category | Criteria | MTD Mandatory From |
---|---|---|
VAT-Registered Businesses | Turnover above the VAT threshold (£85,000) | Apr-19 |
VAT-Registered Businesses | Turnover below the VAT threshold | Apr-22 |
Self-Employed Individuals and Landlords | Income over £50,000 | Apr-26 |
Self-Employed Individuals and Landlords | Income over £30,000 | Apr-27 |
Corporation Tax | All companies | After 2027 (expected) |
Read more about Making tax Digital for landlords.
MTD is not mandatory for Corporation Tax yet, but is expected to be introduced in the future.
HMRC has begun pilot programs with voluntary participants, allowing businesses to trial the digital record-keeping process while filing their Corporation Tax digitally.
Read more about Corporation Tax here.
MTD will become mandatory for the following processes and business types in the future. Here is the quick version:
Category | Income Threshold | MTD Compliance Date |
---|---|---|
Landlords | Over £50,000 | April 2026 |
£30,000 – £50,000 | April 2027 | |
Below £30,000 | To be confirmed | |
Sole Traders | Over £50,000 | April 2026 |
£30,000 – £50,000 | April 2027 | |
Below £30,000 | To be confirmed |
1. Landlords
Landlords with annual property income exceeding £50,000 will see mandatory MTD for self-assessment tax returns from April 2026. Landlords with annual property income between £30,000 and £50,000 must comply with this same change from April 2027.
Further exemptions may apply to smaller landlords based on income thresholds, but this will change in the future.
2. Sole traders
Sole traders with business income over £50,000 must comply with MTD income tax self-assessments from April 2026. Sole traders with business income over £30,000 must comply from April 2027.
Sole traders with income below £30,000 will see MTD compliance changes in the future but these are currently under review by HMRC.
Regardless of your category, following the transition steps will ease the process and make sure of efficiency with minimal operational disruption:
There is currently no date for partnership MTD compliance, but it’s predicted that it will be phased in after sole traders and landlords.
Traditional partnerships may fall under the MTD requirements once the initial rollout for those two groups is complete, but it is advisable to begin preparations by digitising tax records and integrating MTD-compliant software.
There are few exceptions for MTD for VAT-registered businesses, and these are businesses that are inhibited from using computers, the internet, or software. This can be due to:
Making Tax Digital is a vital step for businesses, individuals, and property owners. It makes bookkeeping more accurate, saves time, and makes regulatory compliance easier.
When transitioning, the sooner the better so you can avoid stress as the deadlines loom and position yourself as a future-proofed thought leader in your industry.
Mollan & Co specialises in guiding you through the process with our bespoke digital accounting solutions. We will ensure you remain compliant, efficient, and ready for future tax process challenges ahead of time.
Get in touch today to book your free, no-obligation consultation
I'm the owner and Managing Director of Mollan & Co Accountants. I'm a skilled and efficient accountant with more than 20 years of experience in the industry.
I developed valuable skills in commercialisation through my work in the science and technology department at the Scottish University. Then, in 2002, I formed my own internet-based marketing company, producing and distributing 360° virtual reality tours for the Scottish tourism sector.
I now use my commercial skills, expert tax knowledge and first-hand experience to help other businesses grow and flourish through strong accounting practice.
Our success at Mollan & Co is directly related to the success of our clients.