Making Tax Digital: what small businesses in Chichester & West Sussex need to know
Updated August 2026
Making Tax Digital (MTD) is HMRC's programme to move tax reporting away from paper records and annual guesswork, towards digital record keeping and more frequent updates throughout the year. If you run a small business or are self-employed, MTD affects how — and how often — you report to HMRC.
MTD for VAT
MTD for VAT has been mandatory for all VAT-registered businesses since April 2022, regardless of turnover. If you're VAT registered, you're required to:
- Keep digital VAT records
- Submit VAT returns using MTD-compatible software (such as Xero or QuickBooks)
- Maintain a digital link between your records and your VAT return — no manual re-typing of figures
MTD for Income Tax — what's new
MTD for Income Tax went live on 6 April 2026 and is being phased in by income threshold over the next few years:
- From April 2026 — sole traders and landlords with qualifying income over £50,000
- From April 2027 — threshold drops to over £30,000
- From April 2028 — threshold drops again to over £20,000
If you're both a sole trader and a landlord, income from both sources is added together to determine whether you meet the threshold.
What changes in practice
Instead of a single annual tax return, MTD for Income Tax requires:
- Digital record keeping throughout the year using approved software
- Four quarterly updates of income and expenses submitted to HMRC
- A final declaration after the tax year ends, replacing the traditional Self Assessment return
Key deadlines (standard tax-year quarters)
- Quarter 1 (6 April – 5 July) — update due 7 August
- Quarter 2 (6 July – 5 October) — update due 7 November
- Quarter 3 (6 October – 5 January) — update due 7 February
- Quarter 4 (6 January – 5 April) — update due 7 May
- Final declaration — due 31 January following the end of the tax year
What Balance Accounting can help with
As a registered HMRC agent, I support clients with digital record keeping and quarterly MTD updates for Income Tax, alongside VAT returns and general bookkeeping. Please note that submission of the final declaration falls outside my current licensed scope, and I can refer you to a suitably qualified accountant for this if needed. If you're unsure whether MTD applies to you yet, or want to get your records in order before your deadline arrives, I'm happy to have a quick chat.