In 2026 HMRC are making changes (MTD)
From April 2026, individuals with qualifying income above £50,000 will need to keep digital records, use MTD-compatible software and submit quarterly summaries of their income and expenses to HMRC. These digital requirements will help businesses save time through more efficient record-keeping, reduce errors in tax calculations, and provide a clearer picture of their tax obligations throughout the year.
Qualifying income includes gross income from self-employment and property before any tax allowances or expenses are deducted. Those with qualifying income above £30,000 will also be required to use MTD for Income Tax from April 2027. The threshold will then decrease to £20,000 from April 2028.
The phased introduction of MTD for Income Tax follows the successful implementation of MTD for VAT, which now helps more than two million businesses reduce errors and save time on their tax affairs. Businesses which joined the MTD for VAT testing phase were better prepared for the move to quarterly reporting.
BASICALLY IF THE ABOVE DESCRIBES YOUR BUSINESS, HMRC WANT YOU TO USE A SOFTWARE PACKAGE SUCH AS QUICKBOOKS OR XERO.
For the majority of small businesses with only a few transactions, this means paying out for a software package monthly, that may not really be necessary.
At Cox & Green Accountancy we have a bridging software which means the software package is not necessary - saving you the full cost of your own software package. A small fee will be charged for use of the bridging software.