MTD – FAQs Q1. What is Making Tax Digital and who does it apply to? Making Tax Digital (MTD) is HMRC's programme to modernise UK tax administration by requiring digital record-keeping and digital tax submissions. MTD for VAT is already mandatory for all VAT-registered businesses. MTD for Income Tax Self Assessment becomes mandatory from 6 April 2026 for sole traders and landlords with qualifying income above £50,000, dropping to £30,000 from April 2027 and £20,000 from April 2028. MTD for corporation tax is expected later but no firm date is set. Q2. What does qualifying income mean for MTD for Income Tax? Qualifying income is your combined gross income (before expenses) from self-employment and UK property, measured against your Self Assessment return for the previous tax year. So for the April 2026 start, HMRC will look at your 2024/25 return; if combined gross income exceeded £50,000, you must comply from April 2026. Multiple trades and multiple properties are combined. Atlas Tax Advisors reviews every Milton Keynes client's position well in advance to confirm whether they are in scope. Q3. What software do I need for MTD compliance? You need HMRC-recognised software that supports digital record-keeping and the relevant submissions. For MTD for VAT and Income Tax, this includes Xero, QuickBooks Online, FreeAgent, Sage, and a growing list of property-specific tools like Hammock. Spreadsheets remain acceptable if linked to bridging software that maintains digital links throughout the chain. Atlas Tax Advisors recommends and configures the right setup for each client based on transaction volume, sector, and complexity. Q4. How often will I need to submit information under MTD for Income Tax? Sole traders and landlords in scope must submit quarterly updates of income and expenses to HMRC, plus a final declaration after the tax year ends to confirm the position and finalise tax. Quarterly updates are summary submissions, not full tax returns, and adjustments can be made later. The final declaration replaces the traditional Self Assessment return. We handle every submission for clients on our MTD service so you keep your time focused on running your business. Q5. Will MTD increase my tax bill? No, MTD itself does not change tax rules or rates. However, HMRC has been clear that improved record-keeping under MTD is likely to reveal previously missed income or claimed expenses, which may shift some individual positions. The bigger benefit for compliant clients is real-time visibility of tax liability, which lets you plan cash flow and reliefs proactively. We typically find that our clients save time and money under MTD when supported by good software and proper professional advice. Q6. Can I still use spreadsheets after MTD takes effect? Yes, but only if linked to compliant bridging software that maintains digital links from your spreadsheet to HMRC. The days of typing figures into HMRC's portal directly are over for in-scope businesses. For most landlords and sole traders, switching to a dedicated cloud accounting platform is simpler, cheaper over time, and unlocks better insight than spreadsheet-plus-bridging. We help clients transition smoothly and migrate historic records cleanly so nothing is lost in the move. Q7. What happens if I do not comply with MTD on time? HMRC operates a points-based penalty system for late MTD submissions. Each missed submission earns penalty points up to a threshold (four points for quarterly filers), after which a £200 penalty applies, with further £200 penalties for every subsequent default. Late payment penalties also apply separately. Penalty points reset after a period of compliance. The system is designed to be fair to occasional slip-ups but firm with persistent non-compliance, so reliable processes matter. Q8. Do I need a separate MTD submission for each property or each trade? No. Multiple self-employed trades are aggregated into one MTD-ITSA submission for self-employment income, and all UK rental properties are aggregated into a single property submission. Foreign property income is reported separately. Even though the submissions are aggregated, you need separate digital records for each trade and each property to support the figures. We structure clients' bookkeeping to match this requirement from day one to avoid messy reorganisation later. Q9. Can I voluntarily join MTD for Income Tax before it becomes mandatory? Yes, HMRC operates a voluntary pilot for sole traders and landlords who want to join early. Voluntary participation is genuinely useful for testing your software, getting comfortable with quarterly reporting, and ironing out problems before the rules become mandatory and penalties apply. Atlas Tax Advisors supports clients who want to enter the pilot, so the move to MTD becomes a smooth, well-rehearsed transition rather than a stressful scramble in March 2026 alongside everyone else. Q10. How can Atlas Tax Advisors help me prepare for MTD? We start with an MTD readiness review covering whether you are in scope, when, your current record-keeping, and the most suitable software. We then implement the software, migrate historic data, configure bank feeds, train you or your team, and establish a clear quarterly cycle for submissions. For clients who prefer a fully managed service, we take care of every submission so you focus on running your business while we handle compliance behind the scenes.