Making Tax Digital, also known as MTD, represents a major change for tax compliance in the UK.
By ‘making tax digital’, HMRC intends to collect more information when taxpayers file their returns. As well as filing a summary of their income and tax computation, taxpayers will be required to submit the underlying financial records to support the calculations.
This means it is more important than ever that taxpayers get expert accounting advice to help them file tax returns which are accurate and declare tax correctly. Sherwin Currid can support you on your journey with MTD, from signing up to filing, and help you keep on top of your additional compliance obligations.
Making Tax Digital VAT
From April 2022, MTD is mandatory for all VAT registered businesses. When it was first introduced it was only required for businesses with turnover above a given threshold, but now MTD VAT is compulsory for any business with a VAT number, even if they have registered for VAT voluntarily.
As part of the regime, HMRC is removing VAT return filing capabilities from its Government Gateway website. Instead, VAT returns must now be filed using MTD software.
Having a dedicated accountant at Sherwin Currid can help your business stay on top of its MTD VAT duties, avoiding errors, late submissions and penalties from HMRC.
Choosing the best MTD software
Sherwin Currid can help you identify which is the most suitable MTD software for you or your business. We will take into account how comfortable you are using computers, how you prefer to keep your records, and if you would like to use our bookkeeping service or manage your own.
Bridging Software
This is a temporary solution for clients that prefer to keep paper records or spreadsheets. We can help you file MTD returns in a compliant way for HMRC, by converting your paper records or spreadsheets into an electronic tax return. HMRC has indicated that eventually records will need to be filed on cloud based software and we can help you with this transition smoothly, when it later becomes mandatory.
Cloud Based Accounting Software
If you are happy for your bookkeeping records to be kept in software such as Xero, Quickbooks or FreeAgent, this is ideal as this software enables MTD returns to be filed directly to HMRC. We can help you with the bookkeeping or we can check your returns before they are filed, to give you peace of mind that they are accurate and submitted on time, to avoid you missing deadlines and receiving a late penalty from HMRC.
Making Tax Digital Income Tax Self Assessment or MTD ITSA
As of April 2026, HMRC is expanding MTD to cover Income Tax Self Assessment.
Those affected in this phase of MTD include individuals with sole trade or property income over £50,000 – this amount is based on your income, not your profit (your income before expenses are deducted). From April 2027, this threshold will be reduced to £30,000).
Whereas previously taxpayers could file details of their income annual on a Self Assessment tax return, MTD will require this information to be filed on a quarterly basis, as well as on an annual basis.
This means taxpayers affected by MTD will have a lot more reporting to do and frequent deadlines to be meeting.
Working with Sherwin Currid will mean that we can take on this burden for you and save you time and hassle.
Making Tax Digital for landlords
Individuals with property income over £50,000 will be required from April 2026 to file their income and expenditure every 3 months as well as on an annual basis. As of April 2027, this threshold will be reduced to £30,000.
We can manage MTD for landlords and help you make sure you are claiming your relevant expenditure to minimise your tax liability.
Making Tax Digital for self-employed sole traders
Sole trades with trading income over £50,000 are going to need to submit records of their invoices and purchases for every quarter and make a filing for the end of the year as well. From April 2027, this threshold will be reduced to £30,000.
Depending on your level of income, it may be that we recommend you incorporate your business to avoid quarterly requirements and help with your tax efficiency. Working with your dedicated accountant at Sherwin Currid will help you ensure you are doing the best thing for you and your business.