HMRC’s plan for Making Tax Digital?
HMRC has confirmed that it will not extend Making Tax Digital beyond its current scope until the system has been fully tested and proven to operate effectively. Although earlier roadmaps indicated a faster rollout, the implementation timetable has since been revised to allow for a more measured transition.
Under the updated plan, MTD for Income Tax Self Assessment (ITSA) will apply from April 2026 to self-employed individuals and landlords with gross income exceeding £50,000, followed by those earning above £30,000 from April 2027. The position for individuals with income below £30,000 remains under review, with further announcements expected in due course.
This phased introduction allows HMRC additional time to refine the system and gives businesses and individuals the opportunity to adapt to digital recordkeeping in a structured and supported manner.
At Accounts House, we are already preparing clients well in advance of these deadlines, ensuring a smooth and controlled transition to the new reporting framework.
What will businesses need to do for Making Tax Digital when the scope widens?
Quarterly Updates and In-Year Tax Estimates
Under Making Tax Digital for Income Tax, business owners and landlords will be required to submit updates to HMRC on a quarterly basis using their digital records. This represents a significant change from the current system of annual Self Assessment reporting.
For many businesses that already maintain up-to-date records and regularly review their accounts, this transition will feel like a natural progression. However, for those who traditionally prepare their accounts once a year, quarterly reporting may initially seem like an additional administrative responsibility.
While the reporting frequency increases, the benefit is greater visibility. Regular updates provide a clearer picture of your tax position throughout the year, reducing surprises and allowing for better cash flow planning and informed decision-making.
At Accounts House, we manage the quarterly process seamlessly turning what may appear to be an added obligation into a structured system that provides clarity, control and confidence over your tax liabilities.
Digital Record Keeping
One of the core requirements under Making Tax Digital is the obligation to maintain business and property records digitally using compatible third-party software.
For many landlords and sole traders who already use accounting software or cloud-based systems, this change may require minimal adjustment. However, for those still relying on paper records or manual spreadsheets, a transition to digital recordkeeping will be necessary.
Starting the move to digital systems early is strongly advisable. Becoming familiar with compliant software before it becomes mandatory allows for a smoother transition, reduces last-minute pressure, and minimises the risk of errors once quarterly reporting begins.
At Accounts House, we guide clients through this process step by step ensuring that digital systems are properly implemented, easy to use and fully compliant with HMRC requirements.
Paying Tax More Frequently
Although not formally confirmed by HMRC, Making Tax Digital may in the future create the option for taxpayers to make payments more regularly — potentially closer to real time and on a voluntary basis.
This would represent a shift from the current system, where most self-employed individuals and landlords settle their tax liabilities through annual Self Assessment payments (including payments on account).
The concept is not entirely new. A similar approach was introduced with Real Time Information (RTI) for payroll in 2013, where reporting moved to a more immediate, submission-based system. It would not be surprising if elements of more frequent tax payment were eventually aligned with the broader digital reporting framework under MTD.
While no formal payment reforms have been announced, the move towards quarterly reporting naturally provides greater visibility of tax liabilities during the year. This increased transparency could support more regular, manageable payment planning — reducing large year-end surprises.
At Accounts House, we monitor developments closely and advise clients proactively, ensuring they are prepared not just for current requirements, but for the direction in which the tax system is evolving