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Making Tax Digital (MTD) for Income Tax

Date:
Category:General

Hopefully you are already aware that HMRC have introduced legislation that requires certain individuals to keep and submit electronic records on a quarterly basis, for their business / rental income.

MTD comes in to force from 6 April 2026 if your turnover / rental income or both added together exceed £50,000 and from 6 April 2027 if your turnover / rental income or both added together exceed £30,000. 

Although HMRC have put back the deadline originally from 6 April 2023, they are assuring the accounting / tax profession that MTD will come in to force from 6 April 2026 and there will be no further extensions.

If you will be mandated into MTD from 6 April 2026, we are suggesting that you commence keeping electronic records from 6 April 2025, to allow you time to get used to ensuring your records are kept up to date and, in a format, ready to be submitted to HMRC.

Likewise, if you will be mandated from April 2027, we suggest you start to keep electronic records from 6 April 2026 at the latest but maybe from April 2025.

Even if you don’t expect to be mandated as your turnover will remain below £30K, you may wish to consider keeping electronic records should the rules change, and it became compulsory for all businesses/landlords.

There are the following options:

At a minimum structured spreadsheets – which will also need some kind of ‘Bridging Software’ to extract the information and transfer it to HMRCs systems.

Actual accounting software options for businesses are as follows:

  1. Free Agent
  2. Xero
  3. Quickbooks
  4. Sage

And for Landlords:

  1. Free Agent – Suitable up to 5 Properties
  2. Landlord Studio – Suitable for any number of properties 

If you are unsure which software is suitable for your needs, please get in touch with your usual Stopfords contact in the accounts or tax team.

If you are already using accounting software this should be compatible to make submissions to HMRC if needed in future, though if not with one of the larger providers lists above, we suggest you check with them.

If currently using spreadsheets, these would probably need some amendment as they need to be much more structured to match HMRC headings/systems.

If you would like further information on MTD please contact the office and one of the team will be happy to help 01623 420269.

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