Making Tax Digital – Next Steps

The first stage of HMRC’s Making Tax Digital for Income Tax and Self Assessment (MTD ITSA) used a soft landing approach and imposed new requirements for digital recording keeping on Sole trader businesses and individuals with Turnover and Rental receipts over £50,000 from April 2026. The soft-landing period ends 31 March 2027.

Soft landing period

For Sole Trader businesses and individuals with turnover and rental receipts above the threshold, you need to keep your records in digital format which means that you should be using a computerised accountancy software package such as SAGE, Xero, Quickbooks. Your software should be affordable with the necessary features you require and support.

If you are struggling to comply with digital record-keeping rules, you need to get in touch with us and let us know as after 31 March 2027, HMRC are due to start penalising those who are not MTD ITSA compliant.

Smaller businesses

Smaller sole trade businesses and individuals with turnover over £30,000 will be brought into the Making Tax Digital for ITSA scheme from April 2027 and from April 2028 the threshold is reduced to £20,000. That means that now is the perfect time to start understanding the rules, find software, and establish processes. If you have any questions on this or are concerned you systems fall short, please get in touch now to give your business plenty of time to adjust to the MTD ITSA rules around digital record-keeping and digital links ahead of the go-live date.