Making Tax Digital: Quarterly Updates and Digital Records for UK Small Businesse
Understand UK Making Tax Digital rules, income thresholds, and how to prepare your QuickBooks records for quarterly tax updates.
Who the new rules apply to and when
The MTD for Income Tax rules apply based on your total gross income (your earnings before any expenses are deducted):
- Over £50,000: You should already be using MTD-compatible software for quarterly updates.
- Over £30,000: Your MTD obligations begin in April 2027.
- Over £20,000: Your MTD obligations begin in April 2028.
If your income is below £20,000, you are not required to join MTD for Income Tax yet, but you can choose to do so voluntarily.
What you need to do
To comply with MTD, you must:
- Keep digital records of your income and expenses using MTD-compatible software such as QuickBooks, Xero, or FreeAgent.
- Send four short quarterly updates to HMRC each tax year.
- Submit a final declaration by 31 January to complete your tax year.
Your tax payment deadlines remain the same (31 January and 31 July), but missing your quarterly update deadlines can result in penalty points and fines.
How to get ready
If your income is close to these thresholds, now is the time to move away from paper records or simple spreadsheets. Start using digital accounting software that is compatible with MTD. This will help you keep accurate records throughout the year and make submitting your quarterly updates straightforward.
We recommend reviewing your expected income for the coming tax year and checking whether your current software meets HMRC’s MTD requirements. If you need help setting up digital record-keeping, our team can assist with migrating your data to MTD-compatible software.