Making Tax Digital: Turning a Tax Deadline Into a Business Advantage
For many sole traders and landlords across Northern Ireland, 7 August was the first big test of Making Tax Digital (MTD) for Income Tax: the deadline for submitting the first ever MTD quarterly update to HMRC.
For some, it was a last-minute scramble. For others, it was barely noticed.
The difference had little to do with the complexity of their finances. It came down to one thing: preparation.
We began moving our clients onto digital software at the start of 2026, well ahead of the first quarterly deadline. This gave our clients time to get used to the systems and deal with any practical issues before they became urgent. Something that can be a straightforward administration issue when dealt with in spring can easily become a very different proposition in late July, with months of transactions still to reconcile and a filing deadline days away.
The experience so far suggests that early preparation can make the move to Making Tax Digital a straightforward part of running your business.
In addition, keeping records digitally throughout the year gives business owners a much clearer picture of how they are performing. Under the old system, many business owners complete their books months after the period they related to. By then, the opportunity to act on the information has often passed.
Quarterly digital records provide a much more current view of how a business is performing. This summer, we have had conversations with clients about pricing, staffing and customer payment terms based on figures that simply would not have been available under the old system.
That is where Making Tax Digital can become more than a compliance exercise. Having reliable financial information throughout the year can help business owners make better decisions while there is still time to make them.
The next stages of Making Tax Digital will bring many more businesses and landlords into the system. The first and current MTD phase applies to sole traders and landlords with qualifying income of more than £50,000.
The threshold then falls in April 2027 to businesses and landlords with combined turnover of more than £30,000. In April 2028 this falls again to £20,000. The test is based on income from self-employment and property before expenses. So someone with a small trade alongside rental income may find they reach the threshold sooner than expected.
For those affected from April 2027 or 2028, there is an opportunity to prepare gradually rather than waiting for the deadline.
And e-invoicing is next
MTD is also part of a much wider move towards digital business administration.
From April 2029, businesses will be required to issue VAT invoices in a specified electronic format. The Government is developing the detailed implementation plan, with a roadmap due at Budget 2026.
For businesses, HMRC’s message is consistent: digital accounting is becoming the norm.
The sensible approach is to get ahead of it. Speak with your accountant, choose suitable software, make sure your bank accounts connect properly and start using digital processes before they become compulsory.
The experience of the first MTD deadline shows that the businesses which take steps early can turn change into an opportunity with better information, better visibility and potentially better decision making throughout the year.
The tax rules may be changing, but the right approach can turn digital requirements into a business advantage.
Vicki Johnston is a Chartered Accountant at Abac, Chartered Accountants.
This article is for general information only. You are recommended to seek professional advice before taking action on the basis of the contents of this article.
