Getting Ready for Making Tax Digital

What you need to know before MTD begins

Making Tax Digital is no longer something happening “at some point in the future.” It’s nearly here.

From April, sole traders and landlords earning over £50,000 will need to submit quarterly updates to HMRC. Around 900,000 people are expected to join the regime straight away, so if you’re affected, you’re in good company.

For many, this is the biggest shift in tax reporting in years. And like most changes in tax, it feels far more dramatic before you understand what’s actually involved.

The key? Start early. Future-you will be grateful. 

 

Using approved software (yes, this part matters)

MTD isn’t compatible with spreadsheets stuffed into a desktop folder labelled “Final_Final_Actual_ThisOne.xlsx”.

You’ll need HM Revenue & Customs (HMRC) approved software to keep digital records and submit updates.

If you’re already using accounting software - great. You’re ahead of the curve.
If not, this is your gentle nudge to modernise.

The upside? Good software doesn’t just keep HMRC happy. It can:

• Give you real-time visibility over your cash flow

• Reduce manual errors (and those awkward “how did that happen?” moments)

• Help you make clearer business decisions

• Save you time at year end

Choosing the right system isn’t about ticking a compliance box, it’s about making your life easier. And not all software is created equal, so it’s worth selecting something that actually fits your business rather than something your friend’s cousin recommended.

 

Registering for MTD

HMRC will contact you if your income means you need to join.

However, and this is important, they won’t automatically enrol you.

Registration is your responsibility. Leaving it until the last minute is technically possible. Advisable? Not so much.

 

Are there exemptions?

Yes, but they’re specific.

There are automatic exemptions. For example, trustees and personal representatives of deceased estates won’t need to sign up. HMRC will usually inform you if this applies.

There are also cases where you can apply for an exemption, depending on circumstances. If you suspect you might qualify, it’s worth checking rather than assuming.

 

What if your income is below £50,000?

MTD is being phased in gradually:

• 6 April 2026 – Income above £50,000

• 6 April 2027 – Income above £30,000

• 6 April 2028 – Income above £20,000

If you’re under the threshold for now, this isn’t an excuse to ignore it completely. It just means you have more time to prepare and potentially adopt systems voluntarily before it becomes mandatory.

Some businesses are choosing to move early so the transition feels controlled rather than rushed.

 

Does MTD apply to partnerships?

Not yet.

HMRC have confirmed that partnerships will eventually be brought into the regime, but the timeline hasn’t been finalised. Consider it a “watch this space” situation.

 

Would you like help with MTD?

Software selection can feel like walking into a tech supermarket without a shopping list. Everything looks useful. None of it is labelled clearly.

We help clients:

• Choose software that suits their business (not just the cheapest subscription)

• Register correctly with HMRC

• Set up digital bookkeeping properly from day one

• Handle quarterly submissions

• Manage year-end reporting

And importantly, we explain what’s happening in plain English.

If you’d prefer not to spend your evenings reconciling transactions or deciphering error messages, we’re here.

 

Chancellor Increases Agricultural and Business Property Relief Allowance to £2.5 Million

Surprise amendment to IHT proposals

In a notable revision to earlier plans, the government has increased the full 100% inheritance tax relief for qualifying agricultural and business assets to £2.5 million (previously £1 million), effective from 6 April 2026.

For couples, this means up to £5 million of qualifying assets can potentially pass tax-free alongside standard inheritance tax allowances.

The reforms were originally introduced in the 2024 Autumn Budget, amended once in 2025, and have now been adjusted again. The allowance can now be transferred between spouses or civil partners.

HM Treasury estimates that this change will significantly reduce the number of estates affected, with the majority expected to pay no more inheritance tax than under previous rules.

Inheritance tax planning is rarely something people enjoy discussing but leaving it too late tends to limit options. If you’d like tailored advice on how these reforms affect your estate, we’re happy to help you plan with clarity.

 

Choosing the Right Managed Service Provider

What to ask to get the right IT support

Most small businesses rely on a Managed Service Provider (MSP) for IT and website support.

If you’re not particularly technical yourself, choosing one can feel a bit like being handed a contract written in another language and being asked, “Does this look fine to you?”

Meanwhile, cyber threats are increasing, and your MSP has access to your systems and data. So this decision matters.

The National Cyber Security Centre (NCSC) has published guidance to help businesses ask the right questions and take a proactive approach when working with MSPs.

The guide covers:

• What certifications and contractual clarity to look for

• Conversations to have around patching, backups, access controls and incident response

• Service Level Agreements (SLAs) and response times

• Planning for systems nearing end-of-life

There’s even a due diligence checklist — helpful whether you’re reviewing your current provider or appointing a new one.

In short: don’t just assume “IT is handled.” Make sure it’s handled well.

 

Spring Forecast Scheduled for 3 March 2026

Will there be any changes to tax policy?

The Chancellor, Rachel Reeves, has asked the Office for Budget Responsibility (OBR) to publish an economic and fiscal forecast on 3 March 2026.

This will be an interim update rather than a full fiscal event. That suggests sweeping tax changes are unlikely but until the statement is delivered, nothing is guaranteed.

We’ll review the detail once it’s released and update you with anything that affects your business.

 

Agentic AI: Is It the Future of Shopping?

ICO weighs in on privacy concerns

The Information Commissioner’s Office (ICO) has published a report exploring the rise of “agentic AI” — AI systems that could act as digital personal assistants.

In theory, these tools could:

• Monitor prices

• Make purchases on your behalf

• Negotiate deals

• Arrange financing

• Anticipate your needs

Your AI agent could check your bank balance, compare spending plans and decide when to buy, possibly before you even realise you need something.

Some see this as the next major leap in digital commerce. Others believe expectations may be running ahead of reality.

The ICO’s interest lies in privacy and data protection — understandably so, given the level of financial and behavioural data such systems would need access to.

The report doesn’t introduce new regulation, but it offers insight into how regulators are thinking about the future.

If agentic AI develops as predicted, it could significantly reshape the business landscape. For now, it’s one to monitor rather than panic about.

 

Backtrack on Digital ID Requirements

Digital right to work checks will be mandatory, ID optional

The government appears to have softened its stance on compulsory digital ID registration.

While digital right-to-work checks will become mandatory by 2029, registering for a digital ID itself will remain optional.

Workers may use biometric passports or other government-certified digital verification services instead. The proposal for mandatory digital ID proved controversial, with significant public opposition.

Details on the final structure are still emerging, and many expect integration with Gov.uk systems once launched.

For now, employers should be aware that digital verification will become standard practice — but workers won’t be forced into a single ID system. 

Categories: Positive Accountant