If you’ve been hearing more about Making Tax Digital recently and wondering whether it affects you, you’re certainly not alone. Many sole traders and landlords are now preparing for their first Making Tax Digital submission, and with the first deadline approaching on 7 August, it’s understandable that many business owners have questions.
The good news? It doesn’t have to be complicated.
At Blue Spire, we’re here to make accounting feel less overwhelming. So, let’s take a look at what Making Tax Digital means, who it applies to and what you need to do before your first submission.
Making Tax Digital (MTD) is HMRC’s new way of receiving income and expense information throughout the tax year using compatible digital software. Rather than waiting until the end of the year to gather everything together, you’ll now send HMRC a summary of your income and expenses every three months.
If you’re affected by Making Tax Digital, your first reporting period has now ended, and your first quarterly update is due by 7 August 2026.
Who does Making Tax Digital apply to?
For the 2026/27 tax year, Making Tax Digital applies to sole traders and landlords with qualifying income of more than £50,000 a year.
If this applies to you, you’ll need to keep digital records and submit quarterly updates using compatible software, such as Xero.
If you’re unsure whether Making Tax Digital applies to your business, don’t worry. That’s exactly the sort of question we’re here to help with.
What is a quarterly update?
One of the questions we’re asked most often is whether you’ll need to complete a full tax return every three months. Thankfully, the answer is no.
A quarterly update is simply a summary of your business income and allowable expenses for that period. It helps HMRC build a picture of your income across the year.
You’ll still complete a final year-end declaration, so your tax isn’t being calculated or paid every quarter.
Five things that haven’t changed
Although Making Tax Digital changes how information is sent to HMRC, some important things remain exactly the same.
- You’re not paying tax every three months.
- Quarterly updates are not full tax returns.
- You’ll still complete your year-end declaration.
- Keeping accurate records is just as important as ever.
- Your accountant is still here to guide you through the process.
For many businesses, the biggest change is simply getting into the habit of keeping records up to date rather than leaving everything until the end of the tax year.
How can you prepare for your first Making Tax Digital submission?
If your first Making Tax Digital deadline is approaching, there are a few simple things you can do now.
Start by making sure your bookkeeping is up to date.
If you’re using accounting software such as Xero, check that your bank transactions have been reconciled and your income and expenses are recorded correctly.
If you’re still relying on spreadsheets or paper records, now is a good time to review whether you’re using software that’s compatible with Making Tax Digital.
Most importantly, don’t leave it until the last minute. Giving yourself time to review your records makes the whole process much less stressful.
Don’t panic if you’re feeling unsure
We’ve spoken to lots of business owners who feel a little anxious about Making Tax Digital, especially if this is their first quarterly submission.
The reality is that most people simply want reassurance that they’re doing the right thing. That’s where we come in.
Whether you need help understanding if the rules apply to you, choosing the right software or preparing your first quarterly update, our team is here to support you every step of the way.
Our aim has always been to make accountancy approachable, practical and easy to understand, and Making Tax Digital is no different.
Need help with Making Tax Digital?
If you’re unsure whether Making Tax Digital applies to your business, or you’d like some support before the 7 August deadline, we’d be happy to help.
| Get in touch with our team for friendly, straightforward advice. We’ll help you understand your responsibilities, make sure everything is set up correctly and give you confidence that your first Making Tax Digital submission is in safe hands. |
