Introduction

Making Tax Digital (MTD) for Self‑Assessment is here to simplify your tax reporting—but only if you know what’s changing and how to adapt. From April 2024, anyone earning over £10,000 from self‑employment or rental income must file quarterly updates, not just one annual return. Here’s a client‑focused guide to the latest MTD updates, what they mean for you, and actionable steps to keep your finances on track.

Why MTD Affects You

Regular Reporting: Instead of one big annual tax return, you’ll now submit four shorter “quarterly updates.”

Digital Records Required: All income and expenses must be recorded in software that links directly to HMRC—no more manual spreadsheets or paper notes.

End‑of‑Period Statement: After the April–March tax year ends, you’ll confirm your totals with a final declaration.

These changes aim to give you real‑time visibility of your tax position, helping you budget more effectively and avoid surprise bills.

Key Changes Rolling Out in 2025

Tighter Digital Linking

What it is: All your financial data—bank feeds, invoicing, expense logs—must be directly connected within your MTD‑compatible software.

Why it matters: Manual imports or copy‑pasting between spreadsheets and your tax software will no longer be allowed.

Expanded Income Categories (From April 2026)

What it is: Quarterly reporting will include dividends, bank interest, and capital gains once your total non‑business income exceeds £10,000.

Why it matters: If you earn money from investments, you’ll need to track these sources digitally too.

New Penalty System

What it is: A points‑based regime means that four late quarterly submissions in 12 months could trigger a £200 penalty.

Why it matters: Even one missed quarter can start accruing points—so staying on top of deadlines is crucial.

How to Get Ready: A Client Checklist

Choose the Right Software

Look for HMRC‑listed MTD ITSA software that supports digital linking across invoices, bank feeds, and expense tracking.

Ask your accountant or bookkeeper for recommendations and setup help.

Keep Digital Records from Day One

Connect your business bank account to your accounting software to automate transaction imports.

Snap receipts with mobile apps or upload PDFs directly—avoid saving expenses in standalone spreadsheets.

Mark Your Calendar for Quarterly Deadlines

Deadlines: 5 July, 5 October, 5 January, and 5 April (for the quarter ending on the last day of the previous month).

Schedule reminders in your phone or ask your accountant to send you alerts.

Review Your Data Regularly

Set aside 15–30 minutes at the end of each quarter to review income, expenses, and deductions with your accountant.

Flag any unexpected costs or missing invoices early to avoid last‑minute scrambles.

Understand Your Final Declaration

After 31 March, you’ll confirm all quarterly figures plus any balancing payment by 31 January.

Make sure your software rolls up quarterly updates accurately to avoid discrepancies.

Benefits of Embracing MTD Early

Better Cashflow Insight: Quarterly updates let you see tax liabilities building up in real time.

Reduced Stress: Smaller, more frequent filings spread the workload and prevent January rushes.

Fewer Penalties: On‑time, digital submissions keep you clear of the points‑based penalty system.

Proactive Tax Planning: Your accountant can advise on tax‑saving strategies throughout the year.

Need Help? We’re Here for You

Navigating MTD ITSA doesn’t need to be daunting. Our team offers:

Software setup & training

Quarterly review sessions

End‑of‑year final declaration support

Contact us today for a free 30‑minute consultation to get your MTD journey off on the right foot.