The countdown to Making Tax Digital (‘MTD’) has begun. We are now just over six months from April 2026, when the first group of individuals will be required to comply with MTD.
You may recall that we published a blog in April 2025 to help and inform you on this topic. You can revisit this here. That blog covered the basics and was the first countdown to MTD.
Since that date, there have been several updates, which we are including here. We have also initiated our direct education process with our clients, utilising one-to-one meetings, webinars, and in-person seminars.
This is a big adjustment for many of you. It requires a different approach to managing your books, and it can be frustrating because many of you may not see the value. However, taxpayers need to comply, and we are here to make sure you stay informed.
There is also value in the new rules, including that work is spread more evenly, fewer errors occur, and more data and information are available. So, whilst it may be an unwelcome disruption, it may also deliver benefits. We will wait and see.
When am I required to comply?
MTD for self-employed sole traders and landlords will start from April 2026.
If you have a combined annual turnover of over £50,000, you will need to submit quarterly returns to HM Revenue & Customs (HMRC). This threshold decreases to:
- £30,000 from April 2027
- £20,000 from April 2028.
Your mandated date for MTD will be based on your prior year’s tax return. Thus, your 2024-25 self-assessment will determine if you are affected next April.
So, the question is have you done your tax return yet?
If you leave it too late, you won’t have enough time to prepare, especially if your turnover is on the borderline. Remember to be caught next year, you will need to have turnover of at least £50,000 (as per the 2025 Tax Return) from either self-employment, rental income, or a combination of both.
Here are other compelling reasons why you should submit your tax return before the deadline.
Updated exemptions
In some cases, this may be possible. But we do expect that this will be a very small minority!
HMRC has provided further guidance on the exemptions for individuals meeting the MTD thresholds. These are given under two separate areas “applied exemptions” and “automatic exemptions”.
Individuals will be automatically exempted from MTD if any of the following apply:
- Trustee or personal representative (charitable or non-registered).
- Do not have a National Insurance Number (NINO)
- Legal Power of Attorney (LPA) for someone who has died.
- Recipient of married couples’ allowance or blind persons’ allowance.
- Underwriting Lloyds member.
- Non-resident company.
- Ministers or Religion.
However, for those of you waiting for a NI number, you will be automatically required to be compliant with MTD as soon as your NI Number is issued
You may wish to apply for an exemption if any of the following affect your ability to be compliant with MTD:
- Age (this is a tricky one nowadays)
- Disability
- Location (i.e. no internet access)
- Religious Beliefs
The application for exemptions must be submitted by you (with our guidance) either by phone or in writing. Further guidance can be viewed on HMRC’s website here.
We are not expecting HMRC to agree to a lot of exemptions, so your reasons have to be valid and robust with evidence.
It will almost certainly be easier to work with a good firm of accountants if you can’t do the work yourself. At Myers Clark, we are exploring a three-prong approach:
- Those clients who are comfortable and can do all the work albeit with a little training
- Those clients who are not comfortable and would like us to do it all
- Or a combination of the above two
If you are working on your own or your current accountant is not meeting your expectations, we would be happy to help you. Please email Steffanie.Tiffen@myersclark.co.uk for more information.
Requirements and deadlines
- You must have completed one or more self-assessment tax returns before becoming part of MTD. So, if you are newly self-employed or a landlord, you will need to complete your first self-assessment tax return before becoming compliant for quarterly filing.
- You may choose to voluntarily start using MTD as soon as your business begins if you meet the requirements. Alternatively, you will be automatically required to use MTD the following year.
- You will need to ensure that you are using compatible software to prepare and submit your quarterly submissions. We have been working closely with QuickBooks to assist self-employed individuals and sole traders, as well as Hammock for landlords. These providers will offer our clients a discounted rate to help with your compliance.
If you are unsure whether you need to be compliant for MTD, you can use HMRC’s online tool to check.
Authorisation
The mechanics for obtaining authority to submit the MTD Returns are a bit cumbersome.
It can only be done through your Personal Tax Account or Government Gateway Account.
For an Agent like us to do the submissions, you need to complete a “digital handshake”. If we are working with you, we will be in touch with you over the coming months.
HMRC have also introduced multiple agent authorisation. For example, you might use this if one agent is preparing your bookkeeping and another is handling your quarterly submissions. Both can have authority. The authorisation process must be completed before April 2026.
And then comes the penalties
Quarterly submission and final submission penalties will kick in from April 2026 when MTD comes into force.
The new regime of penalties set out for the final submission are:
- No penalties for the 1st late return. However, “penalty points” will be given (see below)
- £200 penalty for the second late return
For quarterly submissions, penalties are like the final submission regime.
- It’s on a point-based system.
- 1 penalty point for each late return
- The maximum penalty points are four without financial consequences
- When penalty points reach four, a £200 penalty is charged.
- Penalty points expire after 12 months.
Final Thoughts:
Whether you are an existing client or interested in becoming one, please know that we are always here to support you with our resources and expertise. We are serious about you and your ambitions.
We are hosting a series of online webinars and internal seminars to keep you informed and educated about all aspects of MTD. If you would like to attend, please contact Steffanie Tiffen at Steffanie.Tiffen@myersclark.co.uk for more information.
If you are already working with us, please contact your normal manager in the first instance.
If you are not yet working with us but would like to learn more about our services, please visit our website here.
Alternatively, you can email us at enquiries@myersclark.co.uk with your specific questions, and we will respond.
To stay updated on all things related to MTD, be sure to follow us on LinkedIn and Facebook. We will be sharing a wealth of information as we approach next April to help you stay informed and ahead of the curve!