Making Tax Digital for Income Tax: how are you keeping your records?

[Clive_RateandRecord]

Making Tax Digital for Income Tax has started, and a lot more of the trade comes into it next April. I thought it was worth a thread to compare notes.

The dates, from GOV.UK:

- Qualifying income over £50,000 in the 2024 to 2025 tax year: you should have started from 6 April 2026.
- Over £30,000 in the 2025 to 2026 tax year: you need to use it from 6 April 2027.
- Over £20,000 in the 2026 to 2027 tax year: from 6 April 2028.

Source: https://www.gov.uk/guidance/find-out-if-and-when-you-need-to-use-making-tax-digital-for-income-tax

Once you are in, you keep digital records and your software sends HMRC a quarterly update every 3 months. GOV.UK says each update is a summary of your income and expenses, not a tax return. The next deadline is 7 November. HMRC will not give penalty points for late quarterly updates in the 2026 to 2027 tax year, but late tax returns still get them.

Source: https://www.gov.uk/guidance/use-making-tax-digital-for-income-tax/send-quarterly-updates

So how are you keeping records now? Shoebox and a spreadsheet, an app on your phone, or leaving it all to your accountant? And if you have already sent an update, how did it go?

 

[JohnD]

I have a feeling you're going to tell us about the tax app you sell.

 

[noseall]

Xero.

 

[Clive_RateandRecord]

I have a feeling you're going to tell us about the tax app you sell.

Hi John, Fair question! No, I don't sell any tax software, and I'm not linked to any of the providers. I've been in finance a long time and MTD is confusing a lot of people, so I'm just sharing what GOV.UK says. Everything i share comes straight from their pages, so you can check it yourself. Happy to answer anything else if it helps.