MAKING TAX DIGITAL
The first quarter of Making Tax Digital is now behind us, and it's worth taking a moment to reflect on how it's gone. And to also reflect on the workshop and the delivery of Making Tax Digital by Olivia Broadhead.
Update - Where Things Stand
HMRC's own figures tell an interesting story. Of the estimated 864,000 earning over £50,000 gross turnover in the 2024/25 tax year, over 570,000 self-employed people and landlords have now signed up. More than 436,000 have successfully filed their first quarterly update. For a brand new system, that's a substantial number. Most people who've engaged with it have found the process more straightforward than they expected.
Auto-enrolment to begin September 2026
That said, around 294,000 people who should be using MTD for the 2026/27 tax year still haven't registered. HMRC has now confirmed it will begin automatically enrolling those individuals from September 2026, in stages. If you'd rather be in control of how and when you set things up, signing up yourself now is the better route.
What the quarterly update actually is
It's worth being clear on this. A quarterly update is a summary of your income and expenses for the period. It isn't a tax return and no tax is payable on submission of the quarterly update. The payment deadlines for Income Tax and Class 4 National Insurance remain unchanged: 31 January and 31 July each year.
The year-ahead picture
There's no penalty exposure for missed quarterly updates during this first year, which runs to 5 April 2027. HMRC has confirmed that as a grace period. But from April 2027, a points-based penalty system comes into force: one point per missed quarterly deadline, with a £200 fixed penalty once four points accumulate.
The income threshold for mandatory MTD also widens from April 2027, bringing in sole traders and landlords with income over £30,000. If that applies to you and you haven't yet looked at this, now is a sensible time to start.
MTD thresholds reminder
The first quarter of Making Tax Digital is now behind us, and it's worth taking a moment to reflect on how it's gone. And to also reflect on the workshop and the delivery of Making Tax Digital by Olivia Broadhead.
Update - Where Things Stand
HMRC's own figures tell an interesting story. Of the estimated 864,000 earning over £50,000 gross turnover in the 2024/25 tax year, over 570,000 self-employed people and landlords have now signed up. More than 436,000 have successfully filed their first quarterly update. For a brand new system, that's a substantial number. Most people who've engaged with it have found the process more straightforward than they expected.
Auto-enrolment to begin September 2026
That said, around 294,000 people who should be using MTD for the 2026/27 tax year still haven't registered. HMRC has now confirmed it will begin automatically enrolling those individuals from September 2026, in stages. If you'd rather be in control of how and when you set things up, signing up yourself now is the better route.
What the quarterly update actually is
It's worth being clear on this. A quarterly update is a summary of your income and expenses for the period. It isn't a tax return and no tax is payable on submission of the quarterly update. The payment deadlines for Income Tax and Class 4 National Insurance remain unchanged: 31 January and 31 July each year.
The year-ahead picture
There's no penalty exposure for missed quarterly updates during this first year, which runs to 5 April 2027. HMRC has confirmed that as a grace period. But from April 2027, a points-based penalty system comes into force: one point per missed quarterly deadline, with a £200 fixed penalty once four points accumulate.
The income threshold for mandatory MTD also widens from April 2027, bringing in sole traders and landlords with income over £30,000. If that applies to you and you haven't yet looked at this, now is a sensible time to start.
MTD thresholds reminder
- April 2026 start: Gross qualifying income over £50,000 (based on the 2024/25 tax return)
- September 2026: Auto-enrolment begins for the above group
- April 2027 start: Gross qualifying income over £30,000 (based on the 2025/26 tax return)
- April 2028 start: Gross qualifying income over £20,000 (based on the 2026/27 tax return)
One thing worth knowing
Once within MTD, there is no option to file the year-end return through HMRC's own website. Everything, including the final return, must go through compatible software, such as Xero, FreeAgent, Sage and QuickBooks. It's worth making sure whatever you're using covers the full picture, not just the quarterly submissions.
If you're unsure where you stand, or haven't yet sorted your software, get in touch. We're helping clients work through this steadily, without the last-minute pressure.
Reflections on Delivering a Making Tax Digital Workshop
Recently, Olivia Broadhead had the opportunity to deliver a Making Tax Digital for Income Tax workshop through Doncaster Chamber's Launchpad programme. Going into the session, Olivia expected plenty of questions about the technical requirements and deadlines, but what stood out most was the level of uncertainty that still exists amongst business owners and landlords about what Making Tax Digital actually means in practice.
Despite MTD being discussed for several years, many attendees admitted that they were still unsure whether the changes would affect them, when they needed to act, or what they needed to do to prepare. This highlighted something Olivia has found increasingly common when speaking with clients. People know the changes are coming, but many have understandably been waiting until there is greater certainty before investing time and money into new systems.
One of the most encouraging aspects of the workshop was seeing how quickly concerns eased once we started talking through real-life examples. There is still a perception amongst some taxpayers that Making Tax Digital means completing four tax returns each year. Once attendees understood that the quarterly submissions are simply updates and that there remains a single annual tax calculation, much of the anxiety around the changes disappeared.
The discussions also reinforced the fact that every business is different. Whilst some attendees were already using cloud accounting software and felt relatively prepared, others were maintaining excellent records through spreadsheets or more traditional methods. It reminded her that there is no single solution that works for everyone. The right approach is finding a system that meets the requirements while remaining practical and manageable for the individual business owner.
Perhaps the biggest takeaway for her was that Making Tax Digital should not be viewed solely as another compliance burden. Whilst the legislation is undoubtedly being introduced to modernise the tax system and improve reporting, there are genuine benefits for businesses that embrace the change. Better record keeping, greater visibility of business performance, more up-to-date financial information and fewer end-of-year surprises are advantages that many businesses can gain long before they become mandatory.
Interestingly, many of the questions raised during the workshop focused less on compliance and more on how digital record keeping could help businesses better understand their finances. Business owners are increasingly looking for information that allows them to make decisions throughout the year rather than waiting until their accounts are prepared after the year end. In that respect, Making Tax Digital may encourage a positive shift in the way many small businesses manage their finances.
Of course, there are challenges ahead. For businesses that have maintained paper records for many years, the transition may feel daunting. There will also be a period of adjustment as people become familiar with new software and reporting processes. However, her overall impression after the workshop was that these challenges are often less significant than people initially fear, especially when they start preparing early and seek advice where needed.
As the rollout continues and more businesses come within the scope of the rules over the coming years, education and support will remain vital. Workshops such as this provide an excellent opportunity for people to ask questions, share experiences and gain confidence in what can often seem like a complicated piece of legislation.
From her perspective, the key message is simple: don't panic, but don't ignore it either. The businesses that start considering their options now will find the transition far smoother than those who leave everything until the last minute. Having spoken with local business owners at the workshop, she left feeling that whilst there is still work to do in raising awareness, many businesses are already beginning to see Making Tax Digital not just as a requirement, but as an opportunity to improve the way they manage their finances.
Once within MTD, there is no option to file the year-end return through HMRC's own website. Everything, including the final return, must go through compatible software, such as Xero, FreeAgent, Sage and QuickBooks. It's worth making sure whatever you're using covers the full picture, not just the quarterly submissions.
If you're unsure where you stand, or haven't yet sorted your software, get in touch. We're helping clients work through this steadily, without the last-minute pressure.
Reflections on Delivering a Making Tax Digital Workshop
Recently, Olivia Broadhead had the opportunity to deliver a Making Tax Digital for Income Tax workshop through Doncaster Chamber's Launchpad programme. Going into the session, Olivia expected plenty of questions about the technical requirements and deadlines, but what stood out most was the level of uncertainty that still exists amongst business owners and landlords about what Making Tax Digital actually means in practice.
Despite MTD being discussed for several years, many attendees admitted that they were still unsure whether the changes would affect them, when they needed to act, or what they needed to do to prepare. This highlighted something Olivia has found increasingly common when speaking with clients. People know the changes are coming, but many have understandably been waiting until there is greater certainty before investing time and money into new systems.
One of the most encouraging aspects of the workshop was seeing how quickly concerns eased once we started talking through real-life examples. There is still a perception amongst some taxpayers that Making Tax Digital means completing four tax returns each year. Once attendees understood that the quarterly submissions are simply updates and that there remains a single annual tax calculation, much of the anxiety around the changes disappeared.
The discussions also reinforced the fact that every business is different. Whilst some attendees were already using cloud accounting software and felt relatively prepared, others were maintaining excellent records through spreadsheets or more traditional methods. It reminded her that there is no single solution that works for everyone. The right approach is finding a system that meets the requirements while remaining practical and manageable for the individual business owner.
Perhaps the biggest takeaway for her was that Making Tax Digital should not be viewed solely as another compliance burden. Whilst the legislation is undoubtedly being introduced to modernise the tax system and improve reporting, there are genuine benefits for businesses that embrace the change. Better record keeping, greater visibility of business performance, more up-to-date financial information and fewer end-of-year surprises are advantages that many businesses can gain long before they become mandatory.
Interestingly, many of the questions raised during the workshop focused less on compliance and more on how digital record keeping could help businesses better understand their finances. Business owners are increasingly looking for information that allows them to make decisions throughout the year rather than waiting until their accounts are prepared after the year end. In that respect, Making Tax Digital may encourage a positive shift in the way many small businesses manage their finances.
Of course, there are challenges ahead. For businesses that have maintained paper records for many years, the transition may feel daunting. There will also be a period of adjustment as people become familiar with new software and reporting processes. However, her overall impression after the workshop was that these challenges are often less significant than people initially fear, especially when they start preparing early and seek advice where needed.
As the rollout continues and more businesses come within the scope of the rules over the coming years, education and support will remain vital. Workshops such as this provide an excellent opportunity for people to ask questions, share experiences and gain confidence in what can often seem like a complicated piece of legislation.
From her perspective, the key message is simple: don't panic, but don't ignore it either. The businesses that start considering their options now will find the transition far smoother than those who leave everything until the last minute. Having spoken with local business owners at the workshop, she left feeling that whilst there is still work to do in raising awareness, many businesses are already beginning to see Making Tax Digital not just as a requirement, but as an opportunity to improve the way they manage their finances.
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Kingswood
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Joshua Bearn Director
- September 17, 2026
- 01302 349218
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