Friday, 7 August 2026 marks an important milestone for many sole traders and landlords across the UK. If you’re required to comply with Making Tax Digital (MTD) for Income Tax, your first quarterly update must be submitted to HMRC by today using compatible software. This quarterly update is a summary of your income and expenses—it is not your annual tax return.

If you’re still relying on spreadsheets, paper records or manual bookkeeping, now is the time to review your obligations and make sure you’re using HMRC-recognised accounting software such as Xero, QuickBooks, Sage Accounting, FreeAgent, Zoho Books, FreshBooks or another compatible solution.

What Is Making Tax Digital?

Making Tax Digital (MTD) is HMRC’s digital transformation programme designed to modernise the UK’s tax system.

Instead of preparing accounts manually and submitting information once a year, eligible taxpayers are now required to:

  • Keep digital financial records
  • Use HMRC-compatible accounting software
  • Submit quarterly updates electronically
  • Continue completing their end-of-year tax obligations

The objective is to reduce reporting errors, improve record keeping and help businesses gain a clearer understanding of their tax position throughout the year.

Who Needs to Comply?

Making Tax Digital for Income Tax currently applies to many:

  • Sole Traders
  • Self-Employed Individuals
  • Landlords
  • Property Investors

If your combined gross income from self-employment and property exceeded £50,000, you are likely to fall within the first phase of MTD for Income Tax. HMRC plans to extend the rules to those earning more than £30,000 from April 2027 and more than £20,000 from April 2028.

If you’re unsure whether these rules apply to you, professional advice can help you determine your obligations before future deadlines.

Why Is This Deadline Important?

Today’s deadline is significant because it is the first quarterly update deadline under the new Making Tax Digital for Income Tax system.

This update covers the first reporting period of the tax year and gives HMRC a digital summary of your income and allowable business expenses.

It’s important to remember:

  • This is not your Self Assessment tax return
  • No tax payment is made with this quarterly update
  • You will still complete your end-of-year tax obligations as required

Questions We’re Hearing from Business Owners

Many clients have contacted us with similar concerns, including:

  • Does Making Tax Digital apply to me?
  • What happens if I miss today’s deadline?
  • Can I continue using spreadsheets?
  • Which accounting software should I choose?
  • Do I still need to submit a Self Assessment tax return?
  • Can an accountant manage everything for me?

These are perfectly normal questions, particularly for businesses moving to digital record keeping for the first time.

Choosing HMRC-Compatible Accounting Software

One of the biggest changes introduced by Making Tax Digital is the requirement to use compatible software.

Some of the most popular cloud accounting platforms include:

Xero

Ideal for growing businesses looking for powerful bookkeeping, invoicing, payroll and reporting features.

QuickBooks

Popular with freelancers and small businesses thanks to its intuitive interface and automation tools.

Sage Accounting

A trusted accounting platform offering bookkeeping, VAT management, payroll integration and financial reporting.

FreeAgent

Well suited to freelancers, contractors and small businesses wanting straightforward tax and bookkeeping features.

Zoho Books

A flexible cloud accounting solution with strong automation and business management tools.

FreshBooks

Designed primarily for freelancers and service-based businesses with simple invoicing and expense tracking.

Choosing the right software depends on your business structure, reporting requirements and future growth plans.

Benefits of Moving to Cloud Accounting

Making Tax Digital isn’t simply about meeting legal obligations.

Cloud accounting offers businesses significant advantages, including:

  • Real-time financial information
  • Secure online record keeping
  • Automated bank feeds
  • Faster VAT reporting
  • Improved cash flow visibility
  • Better financial reporting
  • Reduced manual data entry
  • Easier collaboration with your accountant

Many business owners discover that cloud accounting saves time while providing greater confidence in their financial information.

Common Mistakes to Avoid

Businesses preparing for Making Tax Digital often make avoidable mistakes such as:

  • Waiting until the deadline to get started
  • Using software that isn’t HMRC compatible
  • Keeping incomplete financial records
  • Mixing personal and business expenses
  • Ignoring HMRC guidance
  • Assuming they are exempt without checking

Planning ahead makes compliance far easier and reduces the likelihood of unnecessary issues later in the tax year.

How NexTeam Accountants Can Help

At NexTeam Accountants, we support startups, freelancers, landlords, limited companies and growing businesses throughout London and the UK.

Our services include:

Whether you’re switching accounting software or preparing your first quarterly submission, our experienced team is here to help.

Don’t Wait for the Next Deadline

If today’s deadline has highlighted gaps in your accounting systems, now is the perfect opportunity to put the right processes in place for the rest of the tax year.

Preparing early makes future quarterly updates much easier and gives you greater confidence in your business finances.

Professional advice today could save significant time, stress and potential compliance issues tomorrow.

Need Help with Making Tax Digital?

If you’re unsure about your obligations or need support with:

  • Making Tax Digital
  • Bookkeeping
  • Payroll
  • VAT Returns
  • Corporation Tax
  • Self Assessment
  • Xero
  • QuickBooks
  • Sage Accounting
  • Cloud Accounting

our experienced team at NexTeam Accountants is ready to help.

We proudly support businesses throughout London and across the UK, providing practical accounting solutions that help businesses stay compliant, organised and focused on growth.

Frequently Asked Questions

Does Making Tax Digital replace my Self Assessment tax return?

No. Quarterly updates are separate from your annual Self Assessment obligations. You’ll still need to complete your end-of-year tax requirements.

Which accounting software is compatible with HMRC?

Popular HMRC-recognised options include Xero, QuickBooks, Sage Accounting, FreeAgent, Zoho Books and FreshBooks, along with other recognised software.

Can an accountant submit Making Tax Digital updates for me?

Yes. If you appoint an accountant, they can manage your bookkeeping, digital records and quarterly submissions on your behalf.

What if I’m unsure whether Making Tax Digital applies to me?

A professional accountant can review your income and business circumstances to confirm whether you’re required to comply with HMRC’s Making Tax Digital rules.