Making Tax Digital

As a modern and innovative accounting firm, Knowles Warwick accountants are here to provide Making Tax Digital help and give you a clear roadmap to success.

Whether you choose Sage, Quickbooks or Xero as your online accounting tool, we will help you implement your new digital tax process and provide ongoing support as you get to grips with your functional compatible software.

What is Making Tax Digital?

Making Tax Digital, or MTD, is the UK government’s vision to modernise the tax system by requiring taxpayers to store digital records and manage their tax affairs online. By 2028, most taxpayers will have an online account where they can update their details, submit quarterly updates, and pay their tax bills digitally.

This means:

• no more paper tax returns

• all your tax information stored in one place

• the ability to update your account in real time and pay tax based on your activity during the year

• no need for tax rebates as you will only pay what you owe

Making Tax Digital for VAT

If your business is VAT-registered — regardless of taxable turnover — you are mandated to keep digital records and submit VAT returns online using HMRC-approved accounting software.

There are significant advantages to going digital, and we’ve been working with many clients to help them comply with the new regulations and streamline their accounts.

Using compatible software means:

• a clear picture of your current financial position in real-time;

• automatic updates that allow you to spend more time managing your business;

• your accounts are 100% online, therefore there’s no software to install and everything is backed up automatically;

• updates are free and instantly available; and

• upfront accounting software costs are eliminated, no more upgrades, maintenance, system administration costs, or server failures.

Making Tax Digital for Income Tax (MTD for ITSA)

The next phase of Making Tax Digital focuses on Income Tax Self Assessment (ITSA). The rollout is confirmed as follows:

• From April 2026 – Mandatory for self-employed individuals, sole traders, partnerships, and landlords with combined gross income over £50,000.

• From April 2027 – Threshold lowers to £30,000.

• From April 2028 – Threshold lowers to £20,000.

Under MTD for ITSA, you will need to submit quarterly income and expense updates through compatible software, followed by a Final Declaration after the tax year ends. This new way of filing ensures better compliance and improved cash flow management.

Making Tax Digital Timeline

Get ready for MTD

Follow our checklist to prepare your business finances for MTD:

If you don’t already use software like Xero, Quickbooks or Sage, you may be able to use bridging software to help you file your returns, but your HMRC Gateway will no longer be available. You’ll also need to authorise your software before you can start filing.

Check if your current software is compatible and authorise it here.

Once your software is ready, you’ll need to sign up for MTD on the GOV UK website. To do this you’ll need your existing Government Gateway login and your VAT number.

Click here to register for MTD.

Read our Making Tax Digital FAQs

What Next?

At Knowles Warwick, we’re taking a proactive approach to the ongoing changes in the tax system to ensure all our clients remain compliant. Get in touch to discuss how we can support you as you transition to online accounting and digital tax. Call us on 0114 274 7576 or email bestadvice@knowleswarwick.com.