What Is Making Tax Digital? A Simple Explanation
Making Tax Digital (MTD) is HMRC's programme to modernise the UK tax system. Instead of filing one annual tax return, affected taxpayers keep digital records and submit summaries to HMRC every quarter using compatible software.
Why MTD Exists
HMRC estimates that errors on tax returns cost the government billions each year. Many of these errors are unintentional — typos, forgotten income, miscalculated expenses. Digital record keeping and more frequent reporting are designed to reduce these mistakes.
Who It Affects
MTD for Income Tax applies to sole traders and landlords. From April 2026, those with gross income over £50,000 must comply. From April 2027, the threshold drops to £30,000. Limited companies are not yet included.
What You Need to Do
- Keep digital records of all business income and expenses in compatible software
- Submit quarterly updates to HMRC (four times per year)
- File a final declaration after the tax year ends, replacing your Self Assessment return
What Software You Need
You need MTD-compatible software recognised by HMRC. Accounted is designed specifically for UK sole traders, with bank feeds, AI categorisation, and automatic quarterly submissions.
The Key Dates
- April 2026: Mandatory for those over £50,000
- April 2027: Mandatory for those over £30,000
MTD is coming. Accounted is already compliant. Start free and be ready before the deadline.
Tax & Compliance Specialists
Our tax specialists have decades of combined experience in UK sole trader and small business taxation, MTD compliance, and HMRC submissions. All content is reviewed against current HMRC guidance before publication and updated quarterly to reflect legislative changes.
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