Making Tax Digital (MTD) has been talked about for years, but the next phase is no longer distant. It’s approaching quickly, and for many business owners, it will fundamentally change how tax is reported and managed.
If you’re unsure whether it applies to you, what you need to do, or whether your current systems are ready, you’re not alone.
This guide explains what’s changing, what action is needed, and how Chorus can support you through the transition.
What Is Making Tax Digital?
Making Tax Digital is HMRC’s long-term plan to modernise the UK tax system. The goal is to:
- Reduce errors
- Improve accuracy
- Increase digital record-keeping
- Move away from annual reporting
MTD is already in place for VAT-registered businesses. The next major step is Making Tax Digital for Income Tax Self-Assessment (MTD for ITSA).
Who is Affected by MTD Making Tax Digital?
From April 2026, MTD for Income Tax will apply to:
- Self-employed individuals
- Landlords
With a qualifying income over £50,000.
From April 2027, the threshold reduces to £30,000.
If your business or rental income exceeds these limits, you will need to comply.
Importantly, this applies to income, not profit.
What Will Change if This is Me?
Under MTD for Income Tax, applicable individuals must:
Keep Digital Records – Spreadsheets alone will not be sufficient unless they are connected to compatible software. Records must be kept digitally.
Submit Quarterly Updates – Instead of filing one annual Self-Assessment return, you will submit updates to HMRC every three months.
Submit an End-of-Year Final Declaration – You will still confirm your total income and make final adjustments at year-end.
This means moving from one annual submission to five submissions per year.
This is a significant operational shift.
Why This Matters for Small and Growing Businesses
The biggest impact of MTD isn’t just more submissions, it’s the need for:
- More consistent bookkeeping
- Better record-keeping systems
- Timely data entry
- Stronger financial discipline
If your bookkeeping is currently done once a year or only when the accountant requests it, that approach will not work under MTD.
Waiting until the deadline approaches could lead to:
- Rushed software decisions
- Increased admin pressure
- Greater risk of errors
- Penalties for non-compliance
The transition is manageable but only with preparation.
Common Questions
Do I need new software?
Possibly. You will need MTD-compatible software. The right choice depends on your business.
Can I still use spreadsheets?
Only if they are linked to bridging software that meets HMRC requirements.
Will this increase my tax bill?
MTD doesn’t change how much tax you pay, but better visibility may improve planning and reduce surprises.
Will this create more work?
Initially, yes, unless systems are set up correctly.
What Should You Be Doing Now?
If you are likely to fall within the threshold, you should:
- Confirm whether MTD applies to you
- Review your current bookkeeping process
- Find gaps in digital record-keeping
- Assess whether your current software is compliant
- Plan a transition timeline before April 2026
Early preparation removes stress later.
How Chorus Helps You Prepare for Making Tax Digital
At Chorus, we understand that most business owners don’t want to become tax software experts. You want clarity, simplicity, and reassurance that everything is being managed correctly.
We help by:
- Assessing Whether MTD Applies to You – We review your income levels and confirm your obligations.
- Recommending the Right Software – Not all systems suit every business. We match software to your needs.
- Setting Up Digital Processes – We help implement simple, workable systems that fit into your routine.
- Providing Ongoing Support – Quarterly reporting shouldn’t feel overwhelming. We guide you through it.
- Efficient Tax Planning – With more regular reporting comes better forecasting, and we help you use that insight strategically.
Final Thoughts
Making Tax Digital is one of the biggest administrative changes to UK personal business taxation in recent years. While it increases reporting frequency, it also creates an opportunity for better visibility and improved financial control if managed correctly.
If you’re unsure whether MTD applies to you, or if you’d like help reviewing your systems, Chorus is here to support you.
