Making Tax Digital for Income Tax: What You Need to Know
Making Tax Digital (MTD) for Income Tax is a major shift in how sole traders and local entrepreneurs manage their finances. If you are looking for advice on Making Tax Digital for small businesses in Reading, preparation is key. At R&B Accountants, we specialize in helping local businesses transition from traditional paper records to streamlined, digital reporting that satisfies HMRC’s evolving requirements.
Why MTD for Income Tax Matters for Reading Entrepreneurs
MTD for Income Tax will require self-employed individuals and landlords across Berkshire with qualifying income to:
- Keep digital records of income and expenses
- Submit quarterly updates to HMRC using MTD-compliant software
- Final year-end tax return submission
This replaces the traditional once-a-year Self-Assessment return. For many small businesses in Reading, this means moving to cloud accounting tools like Xero or QuickBooks to ensure data is captured in real-time.
Who Does It Apply To?
MTD for Income Tax will apply to:
MTD does not cover partnerships; MT
- Self-employed individuals
- Landlords
MTD income tax is expected to be extended to partnerships at some point, but its unsure when. MTD will be introduced in stages based on turnover.
Important Deadlines for Small Businesses in Berkshire
The rollout of MTD for IT will happen in phases based on your turnover:
- From April 2026, for those with qualifying income over £50,000 (Includes Landlords)
- From April 2027, for those with income over £30,000
- From April 2028, for those with income over £20,000
How can you prepare?
Being prepared for MTD Income Tax is important because it’s going to be mandatory. It can seem daunting but it doesn’t have to be.
- First step is, work out your qualifying income?
- If your total annual income from self-employment and property is over £50,000 then you need to register for MTD.
- Register for MTD Income tax with HMRC
- Set up a cloud accounting software such as Xero or use a bridging software.
- Keep your bookkeeping records up to date
- File your quarterly returns on correctly and on time
- Check records at year end, and file yearly tax return.
How R&B Accountants Supports Small Businesses in Reading
We understand that digital tax transitions can be daunting. As a leading firm for Making Tax Digital for small businesses in Reading, we offer hands-on support, including:
- Set our clients up for MTD when they qualify
- Choose and set up MTD-compliant software
- Move from manual records to digital systems
- Stay compliant with quarterly submissions
- Understand what the numbers really mean for their business and how this can help with cash flow and business planning
Final Thoughts
MTD for Income Tax is a significant change, but it doesn’t need to be overwhelming. With a bit of planning and the right guidance, it can give you better visibility and control over your finances.
If you’re unsure how MTD will affect you, or want help getting prepared, speaking to your accountant early can make all the difference. An accountant isn’t just a fee, they are an extension to your business and an investment to support you and your businesses finances and growth.
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