Maxing Tax Digital

Making Tax Digital signals the end of handwritten records and for some people the end of keeping no records at all.

In April 2015 HMRC announced plans requiring every business and individual to report their tax affairs online every quarter.

Since then there have been extensive discussions between HMRC and accounting bodies. Despite strong objections and concerns raised across the profession the plans are continuing.

In January 2017 HMRC confirmed it would move forward largely unchanged. HMRC believes this approach will reduce reporting errors. HMRC keeps pushing the plans forward, even though government estimates of the cost to businesses have been widely challenged and debated in Parliament.

What Is Changing?

From April 2026 most sole traders, partnerships and landlords who owe tax or Class 4 National Insurance will need to report their income and expenses every three months. This will be based on your 2025 tax return information.

There will only be 30 days after the end of each quarter to submit the report and penalties will apply for late or missing submissions. A final end of year submission will still be required within 10 months of your year end or by 31 January, whichever is sooner.

People whose main income is employment or pensions and whose secondary income is less than £50,000 will not be included until April 2027 when the threshold is expected to reduce to £30,000.

VAT and MTD

VAT registered businesses with turnover above the VAT threshold are already required to submit VAT returns digitally. This is the first stage of Making Tax Digital and the wider requirements build from this.

What HMRC Expects

HMRC expects every affected business and individual to record income and expenses digitally and submit information online every quarter using compatible software. Consequently, estimates and paper-based records will not be acceptable, with any adjustments on the final 5th submission likely to be seen as a red flag for investigation.

What This Means in Reality

Some clients may welcome the idea of communicating financial information more regularly. However, most tell us they are already busy and the idea of more reporting feels overwhelming.

Software Options

HMRC has confirmed that spreadsheets will still be accepted for record keeping. However the data must then be transferred into compatible software for submission. This transfer creates additional work and as our fees reflect time required using accounting software directly is likely to be more efficient and cost effective.

If you would like to explore options for how we can help you set up accounting software such as Xero or KashFlow you can visit the Accounting Software section of our website.

Get In Touch

If you are concerned you are not alone. We will support you through these changes and will offer a full quarterly reporting service. Costs will depend on the volume of work required and the support level each client needs.

The more you can help us with digital records the lower your cost is likely to be.

We will work with you to put a suitable system in place. For most people this is likely to include software linked to bank information.

Book a Meeting

Our Offices

We support businesses across the UK with offices in Whaley Bridge in Derbyshire and Cheadle in Staffordshire. Whether you prefer in person meetings or remote support you will receive consistent professional guidance.

KBS Oakes Partnership
Whaley Bridge

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The Curtis Partnership
Cheadle