The government’s Making Tax Digital (MTD) programme is transforming the way businesses and individuals manage and report their tax. While some rules are already in place, 2025 brings important changes that every business owner should prepare for.

At Modus Accountants, we’re helping Oxfordshire businesses stay compliant and avoid the pitfalls of MTD. Here’s a clear guide to what’s changing and how it affects you.

1. What Is Making Tax Digital?

Making Tax Digital is HMRC’s plan to move the UK’s tax system fully online. Businesses and individuals must:

Keep digital records of income and expenses.

Submit tax returns via MTD-compatible software (e.g. Xero, QuickBooks, FreeAgent).

2. MTD Timeline – Where We Are in 2025

VAT: All VAT-registered businesses must already follow MTD rules (since April 2022). For more about VAT click here.

Income Tax Self Assessment (ITSA): From April 2026, self-employed individuals and landlords with income over £50,000 must keep digital records and file quarterly. From April 2027, the threshold drops to £30,000.

Corporation Tax: MTD for companies is expected in future but no start date has been confirmed.

3. Who Needs to Act Now?

Landlords with property income near or above £50,000.

Sole traders earning £50,000+.

Businesses not yet using digital software for VAT.

Even if you’re under the threshold, getting systems in place early avoids stress later.

4. Benefits of Going Digital

While it may feel like extra admin, MTD has benefits:

More accurate, up-to-date financial records.

Fewer errors and reduced risk of HMRC penalties.

Better visibility of your tax position and cash flow.

Easier collaboration with your accountant.

5. How Modus Helps Businesses with MTD

We’ve already supported hundreds of Oxfordshire businesses through MTD for VAT. Our team can:

Set you up with the right MTD software.

Train you or your team to use it.

Manage quarterly submissions on your behalf.

Provide ongoing support and reviews.

FAQs – Making Tax Digital

Q: Do I need to buy new software?
Yes — HMRC-approved, MTD-compatible software is required. We recommend Xero, QuickBooks, or FreeAgent.

Q: Will MTD increase my tax bill?
Not directly, but better record-keeping may highlight mistakes in past filings.

Q: Can I still use spreadsheets?
Yes, but only if linked to bridging software approved by HMRC.

Next Steps

Making Tax Digital is here to stay, and preparing early will save you time and stress.

At Modus Accountants, we’ll help you transition smoothly, keep your records compliant, and free up more time to run your business.

📞 Call us today on 01993 225030 or 📧 hello@modus-accountants.co.uk to book your free MTD consultation.