The Government Is Going Digital – What It Means for You!

The UK tax system is changing — and if you’re an individual, contractor, freelancer, or small business owner, it’s important to know how the government’s Making Tax Digital (MTD) initiative will affect you.

Over the coming years, HMRC is phasing out paper-based tax returns and replacing them with mandatory digital submissions through approved software. Whether you’re self-employed, running a limited company, or earning income from property, these changes are coming — and now’s the time to get ready.

What is Making Tax Digital?

Making Tax Digital (MTD) is HMRC’s long-term plan to modernise the UK tax system. The aim? To make tax administration more efficient, accurate, and easier for taxpayers to manage.

MTD will require you to:

• Keep digital records of your income and expenses

• Submit quarterly updates to HMRC through approved software

• File a final declaration at year-end, replacing the traditional Self-Assessment return

This means no more spreadsheets or manual submissions — the future is cloud-based and fully digital.

Who Is Affected?

If you fall into any of these groups, MTD will likely affect you:

• Contractors and freelancers working through a limited company

• Self-employed individuals earning income through sole trade work

• Landlords with rental income

• Small businesses with VAT or income tax obligations

When will this happen?

• VAT-registered businesses have already been required to follow MTD rules since April 2022.

• Self-employed individuals and landlords earning over £50,000 annually will need to comply with MTD for Income Tax from April 2026.

• Those earning over £30,000 will be included from April 2027.

If you’re below these thresholds, MTD won’t apply to you yet — but HMRC has made it clear this is the long-term direction.

What Will Change for You?

Right now, most freelancers, contractors, and small business owners submit a single annual Self-Assessment tax return. Under MTD, that process becomes more regular and digital:

• You’ll submit four quarterly updates per year through software

• You’ll review and finalise the year’s figures in a year-end declaration

• You’ll need to use HMRC-approved accounting software to manage this process

While this may sound like more admin, digital tools can actually simplify your workflow and give you better visibility into your finances all year round.

How to Prepare

If you’re not already using digital accounting software, now is the time to start. Here’s what we recommend:

1. Go digital now – cloud tools like Xero, FreeAgent, and QuickBooks are MTD-compliant and user-friendly

2. Digitise your record-keeping – ditch the spreadsheets and paper receipts

3. Speak to your accountant – we can help you choose the right software and ensure that you’re ready

How We Can Help

At Dova Group, we specialise in helping individuals, contractors, freelancers, and small businesses navigate their tax obligations with ease.

Whether you’re just starting out or have an established company, we’ll make sure you:

• Stay compliant with MTD requirements

• Understand your reporting obligations

• Use software that works for your business

Not sure how MTD will affect you? Get in touch — we’ll walk you through everything and make the transition as smooth as possible.

Let’s future-proof your tax process — starting today.