Making Tax Digital (MTD) is HMRC’s initiative to modernise the UK tax system by moving from traditional annual tax returns to a fully digital process.
Instead of submitting one Self Assessment tax return each year, MTD requires you to:
This new system is designed to reduce errors, improve accuracy, and give you a clearer view of your tax position throughout the year.
MTD already applies to VAT-registered businesses and is now being rolled out for Income Tax, affecting self-employed individuals and landlords across the UK
If your income is over £50,000, MTD is mandatory
Making Tax Digital for Income Tax (MTD ITSA) applies primarily to:
Whether you need to comply depends on your qualifying income – your total gross income from self-employment and/or property before expenses.
If you’re self-employed, MTD changes how you report your business finances. You’ll need to submit updates quarterly instead of waiting until the end of the tax year.
Landlords must digitally track rental income and expenses and submit regular updates to HMRC. This applies whether you own one property or a portfolio.
If you’re a CIS subcontractor, MTD will sit alongside your existing CIS obligations. You’ll need to keep digital records of CIS income and expenses, submit quarterly updates and reconcile CIS deductions within your digital records.
Switching to Making Tax Digital doesn’t have to be stressful. At CloudAccountant.co.uk, we provide tailored MTD support designed for your specific situation.
