Making Tax Digital

You may have heard that HMRC will roll out the next phase of Making Tax Digital for Income Tax Self Assessments (MTD for IT) from 2026.

We are getting ahead of things regarding Making Tax Digital for Income Tax, any sole trader or landlord with turnover over £50,000 will need to keep digital records and submit quarterly returns starting the 1^st April/6^th April 2026.  The £50,000 limit will be reduced to £30,000 from April 2027 and further reduced to £20,000 at some point in the future.

The quarterly updates to HMRC will declare income and expenses for the period and cumulative for that tax year, submitted as per the below schedule:

• 1^st April – 30^th June by 7^th August
• 1^st April – 30^th September by 7^th November
• 1^st April – 31^st December by 7^th February
• 1^st April – 31^st March by 7^th May

The quarterly submissions to HMRC do not replace the current annual tax returns therefore final accounts and tax return will still be due by the 31^st January following the tax year. 

Our solution to the new Making Tax Digital for Income Tax is Xero, we have partnered with Xero for quite a few years now which makes financial admin a lot easier.  It comes with a phone app to take pictures of invoices/receipts and can connect to your bank to feed all transactions in.  Although the quarterly returns won’t be required until the quarter ending 30^th June 2026, we have secured 25% discount on Xero for the first 6 months if implementing from 1^st April 2025, thereafter the software would be £7.00+VAT per month.

To book a call to discuss this further, please visit https://outlook.office365.com/book/Infinity@infinity-fs.co.uk/s/b9PmK1rFBU2F44RRwCzOSQ2