Making Tax Digital: are you ready for the new reporting requirements?

The way some sole traders and landlords report their income and expenses to HMRC is changing.

Making Tax Digital for Income Tax requires eligible individuals to maintain digital financial records and provide regular updates to HMRC using compatible software.

For those affected, this represents a significant change from completing a single annual Self Assessment tax return.

Understanding the requirements and preparing early can help make the transition much easier.

What Is Making Tax Digital?

Making Tax Digital is part of the Government’s wider programme to modernise the UK tax system.

Instead of relying solely on an annual tax return, eligible sole traders and landlords must use compatible software to:

• Create and maintain digital financial records
• Record their income and expenses
• Submit quarterly updates to HMRC
• Complete their end-of-year tax obligations

The aim is to make tax reporting more accurate and help individuals maintain a clearer picture of their finances throughout the year.

Who Is Affected?

Making Tax Digital for Income Tax currently applies to sole traders and landlords with qualifying annual income of more than £50,000.

Qualifying income generally means the total gross income received from self-employment and property before expenses are deducted.

Those with more than one source of qualifying income must consider the combined total. For example, someone with both self-employed and rental income may be affected even if neither source individually exceeds the threshold.

What Is Happening in September 2026?

From September 2026, HMRC will begin automatically signing up individuals who need to use Making Tax Digital for the 2026/27 tax year but have not already registered.

This will be based on information HMRC holds from the 2024/25 tax year.

Anyone contacted by HMRC should avoid ignoring the communication, even if they believe the rules do not apply to them. Their circumstances and qualifying income should be checked carefully.

What Do Quarterly Updates Involve?

Quarterly updates provide HMRC with summaries of income and expenses recorded through compatible software.

These submissions do not replace all year-end responsibilities. Individuals will still need to review their records, make any required adjustments and finalise their tax position after the end of the tax year.

It is therefore important to understand both the quarterly and annual requirements.

Why Preparation Matters

Moving to digital reporting may require changes to established bookkeeping and record-keeping processes.

Leaving these changes until the first submission is due could create unnecessary pressure and increase the risk of mistakes.

Preparing early allows time to:

• Confirm whether the rules apply
• Choose suitable accounting software
• Organise existing financial records
• Establish a reliable bookkeeping routine
• Understand submission dates and responsibilities
• Arrange appropriate professional support

How an Accountant Can Help

An accountant can help determine whether Making Tax Digital applies and explain the steps needed to remain compliant.

They can also help with software selection, record keeping, quarterly updates and year-end reporting.

Even where an accountant manages the formal submissions, business owners and landlords will still need an effective process for providing accurate and timely financial information.

Preparing for Digital Tax Reporting

Making Tax Digital is a substantial change, but it can also encourage better financial organisation and provide a more current view of business or property performance.

The sooner appropriate systems are introduced, the easier it should be to manage the new responsibilities.

Are you unsure whether Making Tax Digital applies to you?

Signature Concierge can connect you with the appropriate accounting specialist to review your circumstances, explain your responsibilities and help you prepare for digital reporting.

Contact Signature Concierge today to arrange an initial conversation.