Ask the Expert: Making Tax Digital is here. What does it mean for you? By Simon Boxall, Personal Tax Director

For several years, Making Tax Digital (MTD) has been talked about as one of the biggest changes to the UK's tax system. Now, it's no longer something that's "coming soon". The first phase of Making Tax Digital for Income Tax is underway and the first quarterly submissions have already been made.

While some self-employed individuals and landlords are now working under the new rules, many others will join over the next two years as the rollout continues.

So, what exactly is Making Tax Digital and, perhaps more importantly, should you be thinking about it now?

What is Making Tax Digital?

Making Tax Digital (MTD) changes the way certain self-employed individuals and landlords keep their financial records and report information to HMRC.

Instead of keeping records on paper or preparing everything once a year for a Self Assessment tax return, those within the rules are required to keep digital records and submit quarterly updates using compatible software. At the end of the tax year, a final declaration confirms their overall tax position.

The aim is simple. HMRC wants to reduce errors, encourage digital record keeping and give taxpayers a clearer picture of their tax position throughout the year. Rather than everything being left until January, your financial information is kept up to date as you go.

Who is affected?

The current phase applies to self-employed individuals and landlords with gross income from self-employment and/or property exceeding £50,000.

However, this is only the beginning. The income threshold reduces to £30,000 from April 2027 and then £20,000 from April 2028, meaning many more people will come within the new rules over the next two years.

It's also worth remembering that these thresholds are based on gross income before expenses are deducted, not your taxable profit. We've already spoken to people who assumed they wouldn't be affected, only to discover they'll fall within the rules sooner than they expected.

Three MTD questions we're being asked:

1. "I'm not affected yet. Can I wait?"

You can, but preparing early usually makes the transition much easier. It gives you time to review how you currently keep your records, understand the options available and introduce any changes without working to a deadline.

2. "I'm only a landlord with one or two properties. Does this really apply to me?"

It could. Many landlords don't think of themselves as running a business, but Making Tax Digital doesn't distinguish between someone with a large property portfolio and someone with a single buy-to-let property. If your rental income reaches the relevant threshold, you'll need to comply when your phase of the rollout begins.

3. "Do I need to buy new software?"

Not necessarily.The right solution depends on your circumstances. For some people, existing systems can be adapted, while others may benefit from moving to cloud accounting software. The important thing is choosing a solution that works for you and meets HMRC's requirements.

Our advice

Since the first quarterly submissions began, we've found that most conversations aren't about technology. They're about confidence.

People want to know whether they're affected, when they'll need to act and whether they're keeping the right records.

The good news is that Making Tax Digital doesn't have to be viewed as just another compliance exercise. Clients who prepare early often discover wider benefits too.

Better record keeping provides greater visibility over income and cash flow, makes year-end tax planning easier and reduces the stress that can build around the Self Assessment deadline.

What begins as a change in reporting can become a better way of managing your finances.

Whether you're already within the new rules or know they'll apply over the next few years, understanding the changes now will put you in a much stronger position when your time comes.

At Ward Williams, we're helping self-employed individuals and landlords prepare with practical, straightforward advice tailored to their circumstances, giving them confidence every step of the way.

Need advice?

If you're unsure whether Making Tax Digital applies to you, or you'd like to discuss how to prepare for the next phase of the rollout, we'd be delighted to help.

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