Making Tax Digital -
What does It mean For Your Trades business?
MTD
If you’ve heard of the phrase Making Tax Digital (MTD) being thrown around but still aren’t quite sure what it means for you and your business, you’re not alone. Here’s a simple breakdown of what you need to know, and why right now is the time to act.
What is Making Tax Digital? Making Tax Digital is a government initiative to move the UK tax system fully online. The goal is to make tax administration more efficient and reduce errors by requiring businesses and sole traders to keep digital records and submit information to HMRC through compatible software. Gone are the days of scribbling numbers in a notebook and submitting one annual tax return. MTD means staying on top of your finances throughout the year.
Who does it affect?
MTD is being rolled out in stages:
VAT registered businesses - already required to use MTD.
Self employed sole traders and landlords earning over £50,000 - April 2026 - this is happening now.
Those earning over £30,000 - April 2027.
Those earning over £20,000 - April 2028.
So, if you’re a sole trader running a sustainable business and earning over £50,000, this affects you now.
what will change day to day?
Under MTD for Income Tax, instead of one annual self assessment return you will need to:
Keep digital records - all of your income and expenses throughout the year.
Submit quarterly updates to HMRC - four times a year instead of once.
Submit a final declaration - at the end of the tax year to confirm everything is correct.
This means you need to be organised all year round, not just in January when the self assessment deadline looms.
first deadline is 7th August
If you earn over £50,000 and haven’t yet set up your MTD compliance software or started keeping digital records, you need to act now. The first quarterly submission deadline is 7th August 2026. That is just weeks away. Missing this deadline can result in penalty points from HMRC, which can lead to fines over time.
Don’t wait. Get your systems in place today.
what Software do you Need?
You’ll need MTD compatible software to submit your information to HMRC. Popular options include:
Xero - excellent for small limited companies.
QuickBooks - user friendly and great for sole traders.
FreeAgent - popular with freelancers and contractors.
Choosing the right software for your business can feel overwhelming, but getting set up on the right platform from the start saves a lot of headaches later.
when do you get a bookkeeper?
This is a question a lot of sole traders and small business owners ask, and the honest answer is sooner than you think. Here are the signs it’s time to get help:
You dread looking at your bank account.
You’re spending evenings and weekends doing admin instead of working.
You’re not sure if you’re making a profit.
January self assessment fills you with panic every year.
You’re growing and taking on more clients or staff.
You simply don’t know where to start with MTD.
How natural accounts can help?
Here at Natural Accounts we don’t just file your numbers, we give you clarity , keep you compliant and free up your time to focus on the work you actually love doing. We help get your finances organised, choose software and set up suited to your business, and stay on top of your obligations all year round.
If you’re not sure whether you’re MTD ready, or your first quarterly deadline is looming and need help, get in touch by completing the below enquiry form, or schedule a friendly, no pressure chat.