HMRC's Making Tax Digital initiative continues to expand. For many small and mid-sized businesses, the next phase brings new compliance requirements that are worth understanding sooner rather than later.
What Is Changing
From April 2026, MTD for Income Tax Self Assessment will apply to sole traders and landlords with annual income over £50,000. Those with income over £30,000 will follow from April 2027. Businesses within scope will be required to maintain digital records and submit quarterly updates directly to HMRC using MTD-compatible software.
What This Means in Practice
Businesses that are not currently using MTD-compatible software — such as QuickBooks, Xero or Sage — will need to transition before the deadline. Manual record-keeping and spreadsheet-based accounting will no longer meet HMRC's requirements for those within scope.
What to Do Now
Review your current accounting setup, confirm whether your income threshold brings you within scope, and ensure your software is MTD-compatible. At Obham Outsource, we support UK businesses with bookkeeping and compliance preparation — if you are unsure where to start, get in touch.
This article is for informational purposes only and does not constitute professional tax advice. Please consult a qualified accountant for guidance specific to your circumstances.