Making Tax Digital is HMRC's decade-long project to move the UK tax system entirely online. The ambition is straightforward: businesses and individuals keep digital records and submit data to HMRC through approved software, rather than filling in annual returns from a shoebox of receipts. In theory, it reduces errors, reduces fraud, and gives HMRC (and taxpayers) a more accurate picture of what's owed at any point in time.
In practice, it's been a slow and sometimes confusing rollout. MTD for VAT came into effect for most businesses in 2019, and that chapter is largely done. The next phase — MTD for Income Tax Self Assessment, or MTD ITSA — is what's generating most of the questions we're getting right now.
Where things stand with MTD ITSA
From April 2026, anyone self-employed or earning rental income above £50,000 will need to comply with MTD for Income Tax. From April 2027, that threshold drops to £30,000. HMRC has confirmed these dates, and while there have been previous delays, there's no indication of further postponement at this point.
What this means in practice is that instead of filing a single Self Assessment return once a year, affected taxpayers will need to submit quarterly updates to HMRC — essentially four times a year rather than once. On top of that, their financial records need to be maintained digitally using HMRC-approved software throughout the year, not reconstructed at year end.
There will still be an end-of-year reconciliation, where any adjustments and reliefs are finalised. So it's four quarterly updates plus a final declaration — five submissions where there used to be one.
What actually changes for clients
The headline change is the move to quarterly reporting. But it's worth being clear about what that does and doesn't mean for a typical business owner.
It does not mean you'll be paying tax four times a year instead of once. The amount of tax you owe isn't affected by MTD — only the timing and format of the reporting. Your tax liability is still calculated over a full tax year. The quarterly submissions are essentially progress reports, not additional tax bills.
What it does mean is that your records need to be in better shape throughout the year. The annual scramble — hunting down invoices in March, reconstructing months-old transactions, sending a bin bag of receipts to your accountant in January — won't work under MTD. Records need to be current, complete, and held in approved software. For anyone already using Xero, QuickBooks, or similar cloud accounting tools and keeping on top of their books, this is largely already how things work.
For clients who are already cloud-based and working with a proactive accountant, MTD ITSA changes very little in practice. The infrastructure is already there. The quarterly rhythm is already familiar.
For clients who are still working from spreadsheets or paper records, or who only interact with their accountant once a year, the adjustment is more significant. Not because MTD is complicated — it isn't — but because the underlying habits need to change.
What it means for the accountant relationship
This is the part that's genuinely interesting, and I think largely positive. MTD will push the accountant-client relationship from being primarily annual and backward-looking to being something closer to ongoing and collaborative.
When you're submitting quarterly, it creates four natural touchpoints in the year rather than one. That's four opportunities to look at how the business is performing, flag anything worth planning around, and catch issues before they become problems. For clients who want that kind of proactive relationship, it creates the structure to support it. For those who have only ever seen their accountant in January, it might initially feel like more work — but in practice, smaller more frequent interactions are almost always easier than one annual catch-up where everything is urgent at once.
At Insights, most of our business clients already operate on this kind of quarterly rhythm. We review management accounts, check in on tax positions, and look ahead — so the arrival of MTD ITSA doesn't change very much for them. The infrastructure is there, the habits are in place, and the software is already approved and up to date.
The software question
If you're not already using HMRC-recognised software, now is the right time to sort it. HMRC maintains a list of compatible products, and the major platforms — Xero, QuickBooks, FreeAgent, Sage — are all on it. The choice between them largely comes down to your business type and what your accountant prefers to work with.
What you want to avoid is leaving this until six months before the deadline and then scrambling to migrate years of records into a new system under pressure. We've seen that happen with MTD for VAT, and it created unnecessary stress and some genuine compliance risk. Give yourself time.
If you're already on an approved platform and your records are reasonably current, you're most of the way there. The actual quarterly submissions, once the software is set up correctly, are relatively straightforward.
The honest summary
MTD is a genuine structural change to how tax reporting works in the UK, and it's happening. The businesses that will find it difficult are those that have been putting off moving to digital records, or those who have relied on an annual-only relationship with their accountant. For everyone else, the practical impact is smaller than the headlines suggest.
The best thing to do right now is to check whether you'll be affected by the April 2026 threshold, confirm that your record-keeping software is HMRC-approved, and speak to your accountant about what quarterly reporting will look like in practice. If you don't have an accountant — or your current one hasn't mentioned MTD at all — that might itself be worth thinking about.
If you have questions about whether MTD applies to you, or you want to make sure your records are in the right shape before the deadline, feel free to get in touch. It's a conversation worth having sooner rather than later.
