Making Tax Digital, explained without the jargon

If you are VAT registered, yes — MTD for VAT has been mandatory since April 2022, so digital records and software submission already apply. If you are a sole trader or landlord, check your qualifying income against the thresholds: April 2026 for over £50,000, April 2027 for over £30,000 and April 2028 for over £20,000. If you are within a few thousand pounds of a threshold, set compatible software up before your date rather than after, because the first quarter under MTD is the one where the record-keeping habit either exists or does not.

Your total gross income from self-employment and property combined, before expenses, taken from the Self Assessment return for the relevant earlier tax year. Three things people get wrong. It is turnover, not profit — a landlord with £55,000 of rent and £20,000 of costs is over the £50,000 threshold, not under it. It combines sources, so a £30,000 trade plus £25,000 of rent qualifies even though neither does alone. And it is based on a past return, so your obligation can be triggered by a year that has already happened.

Instead of one Self Assessment return a year, you keep digital records and send a quarterly update of income and expenses for each business or property source, then an End of Period Statement for each source and a single Final Declaration to confirm the year. So four update points rather than one, plus a year-end process that looks much like today's return. The quarterly updates are cumulative summaries, not four mini tax bills — nothing becomes payable earlier. The payment dates do not change: 31 January and 31 July as now.

No. MTD changes how and how often you report figures, not the tax rules, the rates or the allowances. Any change to your bill comes from your actual income and expenses. Two honest caveats. First, people who previously estimated expenses loosely and reconstructed a year in January often find their claims fall once records are kept properly, which is a change in accuracy rather than in tax. Second, the compliance cost rises: software, four submissions and more of your attention through the year. The government's own impact assessments have never pretended otherwise.

You get a penalty point rather than an immediate fine. Reach four points and HMRC issues a £200 penalty, then a further £200 for every subsequent missed submission. Points expire after 24 months if you stay below the threshold, but once you have hit four you need twelve consecutive on-time submissions to reset, which is a full year of getting it right. Late payment is penalised separately from late filing, and interest runs regardless. The design punishes persistent lateness rather than one bad quarter, which is fairer than the old regime but easier to sleepwalk into.

Only if it is linked to HMRC-recognised bridging software that can submit directly from it, and the digital link between the spreadsheet and the submission must be genuine — copying figures across by hand breaks the digital record-keeping requirement. It is legal and some businesses run it happily. For most people it is a worse deal than proper software: two products to maintain, a manual step that is exactly where errors enter, and no receipt capture. FreeAgent is included in every Buzz package and handles records and submission in one place without the bridge.

Possibly. Exemption is available where it is not reasonably practicable for you to use digital tools because of age, disability, location — genuinely no reliable internet — or religious belief, and it has to be applied for and granted by HMRC rather than assumed. Some are also outside scope: trusts, estates and certain partnerships have their own timetable. "I am not very good with computers" is not, on its own, sufficient. If you think you might qualify, apply well ahead of your mandation date, because a refused application close to the deadline leaves no time to prepare.

Not on the original timetable, and there is no confirmed date. HMRC's 2025 Transformation Roadmap confirmed MTD for Corporation Tax is not proceeding as first planned, with a different approach still being worked out. Limited companies should keep filing Corporation Tax as they do now. The sensible read is that the direction of travel has not changed even though the date has: digital records, more frequent reporting and software-based filing are where all of this is heading, and a company already keeping clean digital records will find whatever arrives considerably less disruptive than one that is not.