What Is Making Tax Digital?

Making Tax Digital explained in plain English

Making Tax Digital (MTD) is HMRC's programme to modernise the UK tax system. Instead of filing a single Self Assessment tax return once a year, you'll send quarterly updates of your income and expenses using compatible software — like Accounted.

Who's affected?

MTD for Income Tax Self Assessment (MTD ITSA) is being rolled out in phases:

• April 2026: Sole traders and landlords with annual gross income over £50,000 must comply.
• April 2027: The threshold drops to £30,000 annual gross income.
• April 2028: The threshold is expected to drop further to £20,000, though this is still subject to confirmation.

If your gross income (that's total income before expenses, not profit) exceeds these thresholds, you'll be required to use MTD-compatible software.

What changes for you?

Under the current system, most sole traders file one tax return per year. Under MTD, you'll need to:

1. Keep digital records — Your income and expenses must be recorded digitally throughout the year. No more shoeboxes of receipts (though you should still keep the receipts themselves).
2. Send quarterly updates — Every three months, you'll submit a summary of your income and expenses to HMRC.
3. Submit an End of Period Statement (EOPS) — At the end of each accounting period, you confirm that your records are complete.
4. File a Final Declaration — This replaces the Self Assessment tax return. It includes any additional information (such as personal allowances and other income) needed to calculate your final tax bill.

When are the quarterly deadlines?

For the standard tax year (6 April to 5 April), the quarterly periods and deadlines are:

| Period | Covers | Deadline | |--------|--------|----------| | Q1 | 6 April – 5 July | 7 August | | Q2 | 6 July – 5 October | 7 November | | Q3 | 6 October – 5 January | 7 February | | Q4 | 6 January – 5 April | 7 May |

How Accounted makes MTD simple

Accounted is fully MTD-compatible, which means you don't need to change the way you work. Penny keeps your digital records up to date automatically as transactions come in from your bank. When a quarterly deadline approaches, Penny will let you know via WhatsApp and prepare your submission for review.

You review the summary, confirm it looks correct, and Penny submits it to HMRC on your behalf. The whole process takes a couple of minutes.

Do I still need an accountant?

That's entirely up to you. Many sole traders with straightforward affairs will find that Accounted handles everything they need. However, if you have complex tax situations — such as multiple income sources, capital gains, or overseas income — an accountant can still add real value. Accounted works brilliantly alongside accountants too, giving them a clear view of your books.