MAKING TAX DIGITAL

MAKING TAX DIGITAL - ARE YOU PREPARED?

Making Tax Digital doesn’t need to be a headache. Whether you're a sole trader, landlord, or already VAT-registered as a limited company – changes are here or coming fast. From April 2026, new MTD rules apply to income tax, and if you’re not prepared, you could face costly penalties.  

Quarterly updates. Digital records. Approved making tax digital software. It’s a whole new way to manage your tax. But you don’t have to figure it out alone. 

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AT AAB, WE MAKE MTD SIMPLE:

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Expert Advice on MTD for income tax

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MTD Software set up sorted

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We make MTD for VAT easy

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Support for self-employed, landlords & limited companies

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Ensure compliance

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MAKING TAX DIGITAL - SUPPORT THAT WORKS FOR BUSINESSES & PERSONAL TAX

MTD isn’t one-size-fits-all. Many businesses already deal with MTD VAT software, while self-employed individuals and landlords now also face new income tax rules. We help you manage both sides clearly, compliantly, and with the right digital setup - no confusion, no crossed wires. 

MAKING TAX DIGITAL FOR INCOME TAX: WHAT'S CHANGING

From April 2026, Making Tax Digital for Income Tax will change how self-employed individuals and landlords report their tax. If your combined gross income from self-employment and/or property exceeds £50,000, you’ll need to keep digital records and send quarterly updates to HMRC using approved MTD software. The threshold drops to £30,000 from April 2027 and £20,000 from April 2028, meaning more people will be affected sooner than they think. This replaces the once-a-year self-assessment routine with regular reporting, plus a final year-end declaration. Payments dates aren’t changing for now but the way you track and submit your figures is. For many, this means new software for MTD, new processes, and new risks if things aren’t done right. Getting prepared early helps avoid errors, missed deadlines, and penalties and makes the transition less stressful. 

AAB man on laptop listening and smiling
AAB man on laptop listening and smiling

MAKING TAX DIGITAL FOR INCOME TAX: WHAT'S CHANGING

From April 2026, Making Tax Digital for Income Tax will change how self-employed individuals and landlords report their tax. If your combined gross income from self-employment and/or property exceeds £50,000, you’ll need to keep digital records and send quarterly updates to HMRC using approved MTD software. The threshold drops to £30,000 from April 2027 and £20,000 from April 2028, meaning more people will be affected sooner than they think. This replaces the once-a-year self-assessment routine with regular reporting, plus a final year-end declaration. Payments dates aren’t changing for now but the way you track and submit your figures is. For many, this means new software, new processes, and new risks if things aren’t done right. Getting prepared early helps avoid errors, missed deadlines, and penalties and makes the transition less stressful. 

KEY REQUIREMENTS FOR MTD TAX COMPLIANCE

To help you navigate the process smoothly, we’ve outlined the key actions you need to take to stay compliant and avoid any last-minute surprises.   

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1. THE RIGHT SOFTWARE FOR MTD - SET UP PROPERLY 

Using MTD-compatible software isn’t optional. But choosing it, setting it up, and using it correctly doesn’t have to be your problem. 

AAB can help by: 

  • Getting you set up fast with software for MTD that integrates directly with HMRC 
  • Moving your records online so that income and expenses are captured correctly from day one 
  • Handling quarterly updates accurately and on time - no missed deadlines 
  • Submitting MTD tax returns directly to HMRC through compliant digital links 
  • Training you or your team so you feel confident using the software 
  • Ongoing support when rules change or questions crop up

No guesswork. No scrambling before deadlines. Just a clean, compliant MTD setup that works for your business and personal tax position. 

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Expert Guidance

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Making Tax Digital Software Set Up

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VAT Reporting Support

2. KEEP DIGITAL RECORDS

Under MTD, paper records or manual records aren’t enough. You can still use spreadsheets, but the data must be submitted using compatible bridging software. Don’t worry – we can help with that. You’ll need to keep accurate digital records throughout the year, not just at tax time. 

This includes: 

  • All income received 
  • Business and property expenses 
  • VAT records, if you’re VAT registered 
  • Any tax adjustments needed before submission of the Final Declaration. 

Keeping records digitally means your figures are always up to date and ready for quarterly reporting. It reduces errors, cuts down last-minute admin, and makes year-end declarations far simpler. 

We can support you by helping you put the right systems in place, keeping your records organised, and stepping in when things get complex so your digital records work for you, not just for HMRC. 

An image of Josh McCranor wearing a blue shirt and smiling at the camera. He is holding an AAB branded mug.
An image of Josh McCranor wearing a blue shirt and smiling at the camera. He is holding an AAB branded mug.

2. KEEP DIGITAL RECORDS

Under MTD, paper records or manual records isn’t enough. You can still use spreadsheets but the data must be submitted using compatible bridging software. Don’t worry – we can help with that. You’ll need to keep accurate digital records throughout the year, not just at tax time. 

This includes: 

  • All income received 
  • Business and property expenses 
  • VAT records, if you’re VAT registered 
  • Any tax adjustments needed before submission of the Final Declaration. 

Keeping records digitally means your figures are always up to date and ready for quarterly reporting. It reduces errors, cuts down last-minute admin, and makes year-end declarations far simpler. 

We can support you by helping you put the right systems in place, keeping your records organised, and stepping in when things get complex so your digital records work for you, not just for HMRC. 

“I’ve received exceptional, one-on-one service from AAB’s Private Client team for years. They’ve always gone out of their way to meet deadlines and keep things simple, allowing me to focus on other priorities. Their proactive approach to my tax affairs makes them an invaluable partner.

JOANNA ROBERTSON

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3. QUARTERLY UPDATES

Under Making Tax Digital, you’ll need to submit quarterly updates to HMRC - and they’re not just summaries. Each one is cumulative, including all previous data, and must hit strict deadlines throughout the year. 

Filing Deadlines: 

  • 7 August 
  • 7 November 
  • 7 February 
  • 7 May 

You’ll also need to file a final year-end declaration (replacing the traditional MTD for Self Assessment return) by 31 January, to finalise your tax position. 

Different trades? Property income? Joint ownership? It can get complicated fast. 

We can help you to understand what needs to be submitted when, ensuring you stay compliant and avoid penalties. 

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Structured Implementation

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Clear Reporting

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Ensure Compliance

4. DIGITAL LINKS FOR MTD INCOME TAX AND MTD FOR VAT

MTD rules require a clear digital audit trail. That means no manual copying or pasting between systems - your data must flow seamlessly through digital links. 

AAB can advise on setting this up correctly to keep you fully compliant. 

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An image of Erin Rennie sitting in the Edinburgh office talking with a colleague.

4. DIGITAL LINKS FOR MTD INCOME TAX AND MTD FOR VAT

MTD rules require a clear digital audit trail. That means no manual copying or pasting between systems - your data must flow seamlessly through digital links. 

AAB can advise on setting this up correctly to keep you fully compliant. 

“AAB’s Private Client Tax team has always been on top of my tax affairs, offering proactive advice and making sure I’m up to date with my obligations. Their thorough approach to Tax Returns ensures no opportunity for tax efficiencies is missed. Their attention to detail makes them stand out, and I recommend them to anyone looking for excellent service.”

BRUCE FERGUSON - GROUP FINANCE DIRECTOR HUNTING PLC

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WHAT ARE THE BENEFITS OF MTD?

Making Tax Digital (MTD) isn’t just another filing obligation imposed on the taxpayer by HMRC. It comes with some useful benefits for businesses and self-employed individuals. Here are some of the reasons why it’s worth embracing:  

  • Fewer Errors, Less Stress- Digital records reduce errors from manual entry, lost paperwork, or miscalculations, making your tax figures more accurate and lowering HMRC penalty risks.  
  • Saves Time on Admin- automated calculations and direct submissions reduce spreadsheet work.   
  • Quarterly Updates- Quarterly updates prevent last-minute tax filing stress.   
  • Better Cash Flow Management- gives you a clearer view of your tax liabilities, reducing surprises.   
  • Easier VAT & Tax Filing- MTD-compatible software automates submissions with no data re-entry needed.   
  • More Business Insights- Real-time financial data helps track profits, expenses, and growth opportunities, with some software offering forecasting tools for future planning.   
  • Future-Proofing- Digital tax is here to stay, and MTD prepares you for future changes and keeps you ahead of the curve.   

Ultimately, MTD can make record keeping and reporting less of a headache and help you and your business stay organised. And if it still feels overwhelming, we're here to support you with clear, practical advice every step of the way. 

OUR EXPERIENCED MTD TAX CONSULTANTS

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SARAH SARGENT

PRIVATE CLIENT DIRECTOR

Sarah Sargent is a Private Client Director and Head of Tax Compliance based in our Leeds office. Her role involves leading the national compliance function with a clear focus on improving how tax services are delivered, both for clients and internally. With over 20 years of experience spanning personal tax, corporate tax, employment taxes, and trusts, Sarah brings a broad perspective to everything she does. 

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GRAHAM DYER

PARTNER & HEAD OF DIGITAL ACCOUNTING SOLUTIONS

Graham Dyer is a Partner & Head of Digital Accounting Solutions at our Glasgow office. Graham is an experienced chartered accountant with a dislike of spending long hours adding numbers. He specialises in helping businesses automate their financial systems and identify efficiencies using digital technology.  Graham strives to add value for clients by interpreting the numbers, advising owner-managed businesses on growth, and achieving their goals. 

 

   

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