MTD Guide

If you are a self-employed individual (sole-traders) who received more than £30,000 of qualifying income from your business activities, together with any rental income from your UK and/or overseas properties in the 2025-26 tax year, you will be required to begin complying with MTD from 6 April 2027. Qualifying Income includes the gross income from the aforementioned sources before any tax allowances or expenses are deducted. It does not include income from employment (PAYE), a partnership, or dividends received.

Please read our MTD made simple guide to learn more about the new obligations you may soon have under the MTD regime. Fortunately, compliance is relatively easy to achieve provided you plan ahead. We developed various spreadsheet and software solutions to help our clients who began complying with MTD this tax year. The transition proved to be straightforward and without incident, which promises well for those taxpayers who must begin their MTD journey next year.

What, if any, MTD software should you adopt?

You will soon see a significant rise in media adverting from MTD-approved software suppliers as they vie for your custom. The market leaders are considered to be Sage, Xero and Quickbooks, all of which provide reliable solutions that should be considered.

Let us dispel one myth. You can continue to keep your accounts on spreadsheets and still comply with MTD. You will need to amend your spreadsheets, or adopt the versions we can supply, to ensure you collect the transactional data in the correct format HMRC require. We simple link our HMRC-approved bridging software to our clients' spreadsheets each quarter to complete the MTD-reporting process on their behalf. This approach works for sole-traders with relatively straightforward income and expenditure arrangements.

There are perfectly sound and sensible reasons why you would benefit from adopting one of the many MTD-solutions available today … Provided you accept:

• You must undertake costly up-front training to learn how to use the software before you start relying upon it to fulfill your MTD-reporting obligations. Thinking you can learn on the job is a recipe for disaster.
• Forget the marketing hype on the box. Running accounting software requires more of your time, not less, to use it correctly.
• You must commit to check and control the quality of data being fed in at the front of the system to ensure what comes out is reliable, accurate, and complete. Rubbish-in, means rubbish-out. No one can use the output reports if you can't rely upon the integrity of the data upon which they are built.
• The real cost of using accounting software is a high multiple of the subscription you pay for the operating license each month.

Despite all the cautionary reasons why you need to think carefully before adopting new accounting software, we believe the return-on-investment is always worth it, provided you approach the project in a responsible way from the start. For further information on MTD-approved software, click here.