Making Tax Digital (MTD) for Income Tax is no longer a distant policy discussion. It is happening.
From April 2026, sole traders and landlords with turnover exceeding £50,000 (based on their 2024/25 tax return) will need to comply. From April 2027, the threshold reduces to £30,000.
While many affected taxpayers have not yet received formal notification from HMRC, letters are expected. But waiting for a letter is not a strategy.
This week at CBC, we held a dedicated session for clients we have already identified as falling within the first qualifying bracket. Because good accountancy is not reactive — it’s proactive.
What Will Change?
Under MTD for Income Tax, businesses will need to:
- Maintain digital records
- Submit four quarterly updates
- Submit a final end-of-year declaration
That’s five submissions per year instead of one.
For many business owners, that sounds daunting. MTD can be a difficult concept to get your head around at first.
But there are real positives:
- Reduced January pressure
- Up-to-date financial information
- Greater visibility of performance
- Better-informed business decisions
The shift moves tax reporting from a once-a-year event to an ongoing discipline. And that shift creates opportunity — if handled well.
The Customer Experience of Compliance
Regulatory change often highlights the difference between transactional and relationship-based accountancy.
A transactional approach waits for deadlines and reacts to problems.
A relationship-led approach anticipates impact, communicates early, and supports clients through change in a structured way.
At CBC, we pride ourselves on customer experience. That means:
- Identifying affected clients before they are notified
- Writing personally rather than issuing generic updates
- Hosting sessions to explain changes clearly and allow questions
- Assessing carefully the level of support each business will need
- Reviewing that support on an ongoing basis
Compliance is mandatory but the experience of compliance is a choice.
What About VAT-Registered Businesses?
If you already submit quarterly VAT returns, the digital framework will feel familiar. MTD quarters broadly align with VAT quarters, so operationally the transition should be smoother.
There will still be additional submissions and responsibility, but with the right systems in place, it becomes manageable.
Does it include income from property?
Landlords are also included within MTD for Income Tax.
The right software makes a significant difference. At CBC, we recommend FreeAgent, which allows separate property and business records to be managed efficiently.
The Mettle business bank account (backed by NatWest) currently offers complimentary FreeAgent access. Sole traders are not legally required to hold a business bank account (limited companies are). However, separating finances makes compliance significantly easier and more transparent.
In summary…
For accountants, MTD means more submissions, more checks, more responsibility, and more client touchpoints.
For clients, it means more visibility and more structure.
The companies that will thrive under MTD are those who treat this not simply as additional admin, but as an opportunity to strengthen relationships with their accountant and in turn they will have clearer financial insight throughout the year.
Making Tax Digital is about systems and submissions. But great accountancy is about clarity, confidence, and communication.
If you are a CBC client, we will guide you through this transition step by step. If you are unsure how MTD affects you, now is the time to get in touch with us.
