Choosing the right Making Tax Digital software for your business
Making Tax Digital (MTD) for Income Tax is now in force for many self-employed individuals and landlords. Since 6 April 2026, taxpayers with qualifying business or property income exceeding £50,000 must maintain digital records. They must also submit quarterly updates to HMRC using compatible Making Tax Digital software.
Who needs to comply and when?
Currently, the rules apply to those with qualifying income above £50,000. However, the threshold is scheduled to reduce to £30,000 from April 2027. It will then fall further to £20,000 from April 2028. Consequently, these changes will bring many more taxpayers within the scope of the rules over the coming years.
In addition, although quarterly submissions are now required, taxpayers must still complete a final year-end declaration. This declaration remains due by the following 31 January. Therefore, it is important to stay on top of both quarterly and annual deadlines.
What should Making Tax Digital software do?
Choosing which Making Tax Digital software to use is an important decision for any affected taxpayer. At a minimum, the software should be able to keep digital records and submit quarterly updates to HMRC. It should also support the final declaration process and link directly with HMRC systems.
Beyond these core requirements, some products offer more advanced features. For example, certain Making Tax Digital software includes invoicing, bank feeds and receipt capture. Others provide seamless integration with existing accounting systems. As a result, businesses can streamline their bookkeeping alongside their compliance obligations.
On the other hand, some products are designed for simpler requirements. These may suit sole traders or landlords with straightforward income streams. Therefore, it is worth considering the complexity of your affairs before selecting your Making Tax Digital software.
Can you still use spreadsheets?
HMRC also recognises that some taxpayers may wish to continue using spreadsheets for record-keeping. Fortunately, this remains a possibility. However, the spreadsheets must be linked to HMRC through compatible ‘bridging’ software. This bridging software acts as a connection between your records and HMRC’s systems. As a result, taxpayers who prefer spreadsheets can still meet their obligations, provided they use the right tools.
Getting the right support for your circumstances
Selecting the most suitable Making Tax Digital software can feel overwhelming, given the range of options available. However, making the right choice now can save time and reduce stress in the long run. Moreover, the right Making Tax Digital software will help you stay compliant as the income thresholds continue to fall.
We would be happy to help recommend suitable Making Tax Digital software solutions for your circumstances. Please get in touch with our team today to find out more.
