MTD for Income Tax starts April 2026 for sole traders and landlords earning over £50,000. Our Cheltenham accountants handle your Xero setup, quarterly HMRC submissions, and year-end filing — so you stay compliant without the stress.
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Who Needs Making Tax Digital for Income Tax?
MTD for Income Tax Self Assessment applies to self-employed sole traders and landlords earning above HMRC's income thresholds. Check whether you need to comply.
MTD applies to you
- Self-employed individuals (sole traders)
- Landlords with property income
- Combined business/property income over £50,000 from April 2026
- Over £30,000 from April 2027
- Over £20,000 from April 2028
Making Tax Digital Deadlines: 2026, 2027 & 2028
- April 2024: First testing phase began for MTD for Income Tax
- April 2025: Second testing phase went live for MTD
- April 2026: MTD applies to sole traders & landlords earning over £50,000
- April 2027: MTD applies to sole traders & landlords earning over £30,000
- April 2028: MTD applies to sole traders & landlords earning over £20,000
Why Making Tax Digital Is Good for Your Business
Streamlined & Efficient
Get a clearer picture of your finances and spend less time on paperwork. More time to focus on your business.
Improved Accuracy
A digital system reduces avoidable mistakes that delay tax reporting. No more errors, late filings, or stress.
Transform Your Business
Access real-time financial data to track performance, calculate taxes easily, and budget more effectively.
What Records Do You Need to Keep for MTD?
- Date and amount of each transaction
- Type of income or expense
- VAT details (if applicable)
These records must be maintained digitally with software that stores and transfers data directly to HMRC. Handwritten notes or unlinked spreadsheets won't meet the standard.
Best MTD-Compatible Software for Sole Traders
HMRC maintains an approved list of Making Tax Digital compatible software. Here are the MTD tools we recommend and support for our Cheltenham clients.
- Xero: Our recommendation — we're Xero Gold Partners and handle the full setup for you
- QuickBooks: Popular with sole traders, cloud-based with MTD integration
- Sage: Established UK accounting software with MTD-compatible plans
- FreeAgent: Great for freelancers and contractors
Real-Time Bookkeeping vs MTD Bridging Software
HMRC gives you two ways to meet Making Tax Digital requirements. We believe real-time digital bookkeeping is the right choice — here's why.
Your choice: do the bookkeeping yourself (we set everything up and train you) or hand it over to us entirely. If bridging makes sense short-term, we'll help — but long-term, we'll always guide you toward real-time.
How Our Cheltenham Accountants Get You MTD Ready
From free MTD assessment to quarterly HMRC filing, we handle every step of Making Tax Digital compliance for sole traders, landlords, and small businesses.
Free Assessment
We review your situation and tell you exactly when MTD applies to you — and what you need to do.
Software Setup
We set you up on Xero (or your preferred MTD-compatible tool), migrate your data, and train you.
Quarterly Filing
We handle your quarterly updates to HMRC and your end-of-year statement — so you never miss a deadline.
Ongoing Support
Questions about MTD? We're here. Your dedicated accountant handles everything so you can focus on your business.
MTD Pricing
MTD support is an add-on to your overall Gro package. The additional cost starts from £25/month depending on the level of support you need.
Software Only — from £25/mo
We set up Xero, connect your bank feeds, and train you — you handle the day-to-day bookkeeping yourself
Supported — from £75/mo
We handle your quarterly MTD submissions and year-end filing, you keep your records up to date in Xero
Fully Managed — from £150/mo
We do everything — bookkeeping, receipt capture, quarterly submissions, and year-end. You focus on your business
Your exact price depends on your overall package and how much MTD support you need. Request a strategic meeting and we'll give you a clear, fixed quote — no surprises.
Free Making Tax Digital Guide for Sole Traders & Landlords
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Frequently Asked Questions About Making Tax Digital
What is Making Tax Digital and do I need it?
Making Tax Digital (MTD) is an HMRC initiative requiring businesses to keep digital records and submit tax returns using MTD-compatible software. If you're a sole trader or landlord earning over £50,000, MTD for Income Tax applies to you from April 2026. VAT-registered businesses are already required to use MTD for VAT.
When does Making Tax Digital start for self-employed?
MTD for Income Tax Self Assessment starts in April 2026 for self-employed individuals and landlords with income over £50,000. The threshold drops to £30,000 from April 2027, and to £20,000 from April 2028. If you're unsure whether it applies to you, our Cheltenham accountants can check your situation for free.
Do I have to have everything online with a digital bookkeeping system?
We strongly recommend it. Real-time digital bookkeeping using cloud software like Xero means your income, expenses, and receipts are recorded as they happen. You always know your numbers, you're compliant with MTD now, and you're future-proofed for any changes HMRC introduces. HMRC does offer an alternative called bridging software, which lets you submit quarterly numbers from spreadsheets — but it's a temporary workaround, not a long-term solution. We recommend getting set up properly from the start.
What is MTD bridging software and should I use it?
Bridging software lets you keep using spreadsheets or manual records and submit a one-off quarterly submission of your numbers to HMRC. It's technically compliant, but it doesn't give you real-time financial visibility, won't protect you during HMRC inspections, and isn't future-proof. We'd only recommend bridging as a short-term transition step — for example, to help you through the current year while we get you set up on a proper cloud bookkeeping system like Xero.
Can I do the bookkeeping myself or do you do it for me?
Both options are available. We can set up Xero and train you to handle your own bookkeeping using tools like Dext for receipt capture — just snap a photo and it's in your books. Or, if you'd rather not worry about it, we handle the entire bookkeeping process for you. Either way, we make the transition as stress-free and seamless as possible.
What software is MTD-compatible?
HMRC maintains an approved list of MTD-compatible software. Popular options include Xero, QuickBooks, Sage, and FreeAgent. As Xero Gold Partners, we recommend Xero for most sole traders and small businesses — it's simple, cloud-based, and we handle the full setup and migration for you.
I currently use spreadsheets — is that a big change?
We appreciate that moving from spreadsheets or manual records to a fully digital bookkeeping system is a significant change. That's why we offer a phased approach. If you need time, bridging software can work as a short-term measure for the current year. But long-term, you should definitely move to real-time digital bookkeeping — and we'll make the transition as seamless as possible, handling the setup, data migration, and training for you.
How much does MTD cost for sole traders?
The cost varies depending on the software and accountant you choose. Xero starts from around £15/month. Our MTD packages include Xero setup, quarterly filing to HMRC, and year-end submissions — all for a fixed monthly fee with no hidden charges. Request a strategic meeting to get a quote.
What are the penalties for not complying with MTD?
HMRC uses a points-based penalty system for MTD non-compliance. You receive a penalty point for each missed deadline, and once you hit the threshold (4 points for quarterly obligations), you'll face a £200 fine. Late payments also incur interest charges. Staying compliant with our help avoids all of this.
Do I need an accountant for Making Tax Digital?
You're not legally required to use an accountant, but MTD adds quarterly reporting obligations on top of your annual self assessment. Most sole traders and landlords find it much easier (and more cost-effective) to have an accountant handle their MTD submissions, software setup, and HMRC correspondence. Our Cheltenham team handles everything for you.
What records do I need to keep for MTD?
Under MTD, you must keep digital records of all business income, expenses, and VAT (if applicable). This includes the date, amount, and category of every transaction. Records must be stored in MTD-compatible software — handwritten notes and unlinked spreadsheets don't qualify. We set up your digital record-keeping as part of our service.
Ready to Get Making Tax Digital Compliant?
Our Cheltenham accountants help sole traders, landlords, and small businesses choose the right MTD software, set up digital record-keeping, and file quarterly returns to HMRC — stress-free.
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