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.

 

[Murdochcat]

There can’t be many people who can claim they aren’t aware of MTD …..

 

[johnny2007]

I'm retired now, but my friends mostly use the same bank account for income and expenses so their accounting is a lot easier, only a few bits in expenses to add before doing a tax return.

 

[Exedon]

I've done what a number of others I know have done.
Just packed it all in will be finished by April.
Been slowly winding down for years digital tax last straw.
I don't actually pay for accountancy (daughter a charted accountant) but 4 times tax updates?
HMRC can go do one.

 

[johnny2007]

I can see lots of cash being withdrawn by homeowners in the very near future to pay tradesmen.
This government is very good at shooting itself in the foot.