Last Updated on 19/03/2026 by Adrian Lamb
Why making tax digital is important for small business
Gerry O’Boyle and associates are Accountants from Bangor and Newtownards forming O’Boyle Accounting & Taxation, specialising in saving tax and other costs for small businesses.
For many small business owners, tax season has traditionally meant paperwork, stress, and a rush to pull together receipts and records. But that’s changing. Making Tax Digital (MTD) is reshaping how businesses report income and manage tax responsibilities—bringing a more modern, streamlined approach that benefits sole traders, landlords, and small enterprises alike.
What is Making Tax Digital for Income Tax?
MTD for Income Tax is the new way for sole traders and landlords to report their income, expenses, and submit a tax return. This requires digital record-keeping and more regular updates, making it easier to submit end-of-year returns.
Who will MTD apply to?
Making Tax Digital will apply to sole traders and landlords.
When is MTD going to happen?
In April 2026 – Incomes over £50k. In April 2027 – Incomes over £30k and in April 2028 – Incomes over £20k
Why Is MTD Important for Small Businesses?
- It Reduces Late‑Year Stress and Surprises – Under the current Self Assessment system, many small business owners only review their numbers once a year. MTD changes that. Quarterly submissions help you stay up to date, reducing the risk of big, unexpected tax bills at year‑end.
- It Improves Accuracy and Lowers the Risk of Errors – Digital record‑keeping minimises: lost receipts, miscalculations and manual data entry mistakes. MTD-compatible software connects directly with HMRC, helping ensure calculations are consistent and compliant.
- It Streamlines Business Admin – Rather than a single heavy workload every January, MTD spreads admin evenly across the year. The shift to digital tools makes bookkeeping feel more integrated with day‑to‑day business operations, not an annual chore.
- It Encourages Better Financial Visibility – Having real-time, digital financial data means you can make more informed decisions, track profitability more easily and plan with greater confidence
- It Helps Small Businesses Prepare for the Future of Tax – More tax systems (VAT, Income Tax, and eventually Corporation Tax) are moving toward full digital compliance. Getting the right software and systems in place now ensures you’re not playing catch‑up later. Webinars and support programs already encourage early preparation to avoid last‑minute disruption, especially for self‑employed individuals and small businesses.
How does MTD change Income Tax?
MTD means that you will now need to keep digital records and send quarterly updates to HMRC in addition to the end of year return you submit today.
Digital record keeping – You will be required to record your transactions digitally using software.
Quarterly updates – Send income and expense updates to HMRC at least once per quarter. You will receive up-to-date tax estimates every time you update.
End of year return – You still must finalise and submit the year-end return and pay the tax by 31st January after the tax year end, but up-to-date tax estimates now mean there will be fewer surprises.
Who does Making Tax Digital for income Tax impact?
MTD requirements may vary slightly depending on whether you are a non-VAT registered sole trader, landlord, or accountant. Discover what you need to do and choose the HMRC-recognised software that helps you meet your needs.
