Accounting

Bookkeeping, VAT & payroll

Making Tax Digital accountants

Making Tax Digital is HMRC's long-running programme to move tax reporting from annual paper-style returns to digital records and more frequent submissions. It arrived for VAT first: since April 2022 every VAT-registered business has had to keep records digitally and submit returns through compatible software, with digital links between the records and the submission. It has now reached income tax. From 6 April 2026 sole traders and landlords with gross qualifying income over £50,000 in 2024/25 must keep digital records and send HMRC quarterly updates, with the threshold falling to £30,000 from April 2027 and £20,000 planned for April 2028. For the people affected it is the largest change in how they deal with HMRC since Self Assessment was introduced.

from £99 · fixed setup, then from £35/quarter

Next deadlines

  • MTD quarterly update deadline (7 August, 7 November, 7 February, 7 May)
  • VAT return and payment for the quarter that ended last month
  • VAT return and payment for the quarter that ended last month
  • VAT return and payment for the quarter that ended last month

Fees

Packages, fixed and published

£99

MTD readiness check + software setup

from £35/qtr

Quarterly MTD submissions (Income Tax)

£129

MTD VAT — software setup and first return

from £299/yr

Full MTD service: software, quarterly updates + year-end declaration

Who this is for

Making Tax Digital

Sole traders and landlords in the UK with qualifying income over £50,000 who are already in MTD for Income Tax, those over £30,000 joining in April 2027 and £20,000 planned for April 2028, VAT-registered businesses still filing from spreadsheets or non-compliant software, and anyone who received an HMRC letter about digital record keeping and wants it handled rather than explained.

What is included

Inside the fixed fee

  • Your MTD start date confirmed from your 2024/25 qualifying income and HMRC's phased thresholds
  • MTD-compatible software chosen, set up and connected to HMRC with digital links from bank feeds
  • Digital record keeping configured so every transaction meets the requirements without re-keying
  • Quarterly updates submitted to HMRC by the 7th following each quarter, from your reconciled records
  • The year-end final declaration prepared and filed in place of the traditional Self Assessment return
  • MTD for VAT setup and the first return filed for businesses still on spreadsheets or old software

In detail

How making tax digital works

The requirements under MTD for Income Tax are specific. Records of each business and property income source must be kept in software that meets HMRC's standard, with transactions recorded digitally rather than summarised later. Four quarterly updates per source are due by 7 August, 7 November, 7 February and 7 May, each giving cumulative totals of income and expenses by category with no accounting adjustments or tax calculation. A final declaration by 31 January replaces the Self Assessment return, bringing in the adjustments, capital allowances, reliefs and other income. Payment dates do not change. Penalties are points-based: a point per late submission and £200 when the points reach four, with late payment penalised separately.

The threshold test is the first thing to get right, because HMRC's letters and the thresholds are widely misunderstood. Qualifying income is gross income before expenses from self-employment and property combined, taken from the return two years before the start year, so 2024/25 figures determine the April 2026 wave. Employment, pension, dividend and savings income do not count towards the threshold though they are reported in the final declaration. Jointly owned property has simplified options. Once in MTD you remain in unless income falls below the threshold for three consecutive years, and exemptions for digital exclusion exist but must be applied for. Our £99 readiness check confirms your start date in writing and sets up the software, bank feeds and category mapping so the records are compliant from day one.

Software choice matters less than setup. All the major cloud platforms and several low-cost ones are MTD-compatible, and spreadsheets can still be used with bridging software provided the links are digital rather than copy-and-paste. What determines whether MTD is painless or a quarterly scramble is whether the bank feeds are connected, whether receipts are captured as they arise, and whether the expense categories map correctly to the lines HMRC expects. We set all of that up, authorise the software with HMRC on your behalf and walk you through the day-to-day capture, which for most sole traders takes minutes a week once it is in place.

Our quarterly service from £35 a quarter reviews the records, corrects miscodings and submits each update by the deadline; the full MTD service from £299 a year adds the final declaration with all the year-end work that actually reduces the tax, replacing the traditional Self Assessment fee for clients in the regime. For businesses that do not want to keep the records themselves, our bookkeeping service does the recording and the MTD submissions follow from it with no extra effort. VAT-registered businesses still filing from spreadsheets or unlinked software get compliant with the £129 setup, which includes the first return filed through the new software. Everything is done online, at fixed fees agreed before we start, with every submission approved by you before it goes to HMRC.

Process

From first message to filed

  1. Scope the job

    We find out what you need filed, when it is due and what state the records are in, and tell you which fixed-fee package applies.

  2. Agree the price

    The fee is confirmed in writing. There is no hourly billing and nothing added for questions during the work.

  3. Hand over the records

    Photographs, PDFs, software access or a spreadsheet, sent however suits you. We confirm what we have and what is missing within two working days.

  4. Approve, then we submit

    You review the draft with our explanation, sign off, and we file. Receipts, copies and the next deadlines come back to you immediately.

Worth knowing

Rules that come up in this work

Closing a company

Striking off a company is cheap but must be done in order: stop trading, file the final accounts and CT600, pay the tax, close VAT and PAYE, distribute the remaining assets, close the bank account, then apply. Anything left in the company at dissolution passes to the Crown. Distributions up to £25,000 are taxed as capital gains; above that a formal liquidation is usually needed to keep capital treatment.

Switching accountants

The main reasons people switch accountant are surprise invoices, missed deadlines and not understanding what they are being told. Switching involves a clearance letter between the firms, a transfer of records and agent authorisations, and a short handover of the current position. It takes about two weeks and should cost nothing extra.

The trading and property allowances

Not every small income needs a tax return. The trading allowance exempts the first £1,000 of self-employment or casual income and the property allowance does the same for rental income, each measured on gross receipts. They cannot be combined with rent-a-room relief on the same income, and claiming the allowance means giving up the expense deduction for that source.

Dormant companies

Companies formed to protect a name or hold a future business are dormant but not exempt: Companies House still expects dormant accounts within nine months of the year end and a confirmation statement annually with its £50 fee, and HMRC must be told the company is dormant or it will demand Corporation Tax returns. The filings are short, but the penalties for missing them are the same as for a trading company.

Workplace pensions and auto-enrolment

Auto-enrolment duties begin the day you take on your first employee, not when the Pensions Regulator writes to you. Eligible staff must be enrolled, contributions paid every pay period and re-enrolment carried out every three years. Director-only companies without employment contracts are usually exempt. Fines for non-compliance are fixed and escalating.

Employer National Insurance

Since April 2025 employer National Insurance has been 15% on earnings above a £5,000 secondary threshold, a substantial increase for small employers. The Employment Allowance rose to £10,500 at the same time to soften it for the smallest businesses. Directors deciding their own salary weigh this cost against the Corporation Tax deduction a salary provides.

Allowable expenses

Expense claims are where a return is won or lost in an enquiry. The test is wholly and exclusively for the trade; where a cost is mixed, the business proportion can be claimed if it can be identified. Capital items such as equipment and vans are relieved through capital allowances rather than as expenses, except under the cash basis where they are simply deducted when paid.

Questions

Making Tax Digital: your questions answered

When does Making Tax Digital for Income Tax apply to me?

It depends on your gross self-employment plus property income on your 2024/25 return: over £50,000 means you joined from 6 April 2026; over £30,000 means 6 April 2027; over £20,000 is planned for April 2028. Below £20,000 there is currently no requirement. We check your figures and confirm the date in writing.

What do I actually have to do under MTD for Income Tax?

Keep records of income and expenses digitally in compatible software, send HMRC a quarterly update summarising them by 7 August, 7 November, 7 February and 7 May, and submit a final declaration with any adjustments and other income by 31 January. The tax payment dates are unchanged.

What does the £99 readiness check and setup include?

Confirmation of your start date, choice and setup of MTD-compatible software suited to your business, bank feeds connected, the chart of categories mapped to HMRC's reporting lines, the authorisation of the software with HMRC, and a short walkthrough so you know how to capture receipts and invoices day to day.

Can I keep using my spreadsheet?

Only with bridging software that links the spreadsheet digitally to HMRC, and the links must be digital, not copy-and-paste. For VAT this remains workable; for Income Tax the quarterly category reporting makes proper software far less effort. We set up whichever approach suits you and explain the trade-off honestly.

What is in a quarterly update?

Totals of income and expenses for the quarter by category, taken straight from the digital records. No accounting adjustments, no tax calculation and no payment. The updates are cumulative, so an error in one quarter is corrected in the next. From £35 a quarter we prepare, review and submit each one from your records.

Does MTD change when I pay tax?

No. Payments on account remain due on 31 January and 31 July, and the balancing payment on 31 January after the tax year. HMRC shows an estimated liability after each quarterly update, which is useful for setting money aside, but it is not a demand.

What are the penalties under MTD?

A points-based system: one point for each late quarterly update or declaration, and a £200 penalty once you reach four points, with the count resetting after a period of compliance. Late payment penalties start at 3% after 15 days. The first year has been described by HMRC as light-touch, but points still accrue.

I am a landlord with a job. Does MTD apply to my rental income?

Yes, if your gross rental income, added to any self-employment income, exceeds the threshold for your start year. Employment income does not count towards the threshold but is reported in the final declaration. Jointly owned property has simplified rules allowing the income-only reporting of your share each quarter.

What if my income drops below the threshold later?

Once in MTD you stay in unless your qualifying income falls below the threshold for three consecutive years, after which you can apply to leave. There are exemptions for digital exclusion on grounds of age, disability, location or religion, which must be applied for and granted by HMRC.

How does MTD for VAT differ?

MTD for VAT has applied to all VAT-registered businesses since April 2022: digital records and returns submitted through compatible software, with the same quarterly return as before. If you are still typing figures into a portal or using software that is not linked, you are non-compliant. Our £129 setup includes the first return filed.

Can I do MTD myself without an accountant?

Yes, if you are comfortable keeping the records digitally and submitting four updates and a declaration each year on time. Many sole traders do. The value we add is in the setup being right, the categories mapping correctly to HMRC's lines, the deadlines never being missed and the year-end declaration including the adjustments and allowances that reduce your tax.

What is the full MTD service?

From £299 a year: software subscription guidance, digital record review each quarter, the four quarterly updates submitted, and the year-end final declaration prepared and filed with capital allowances, adjustments and all other income included. It replaces the traditional Self Assessment fee for clients in MTD. Bookkeeping can be added if you would rather not do the recording.

Where

Making Tax Digital across the UK

This service has a local page for the 1,680 larger towns and cities we cover, and is delivered nationally everywhere else. A selection:

England: Central London · East London · East Midlands · East of England · M25 Fringe · North East · North East London · North London · North West · North West London · South East · South East London · South London · South West · South West London · West London · West Midlands · Yorkshire

Scotland: Scotland

Wales: Wales

Northern Ireland: Northern Ireland

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Get making tax digital for a fixed fee

Tell us what you need. You get one fixed fee in writing, and nothing is filed until you approve it.

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