Making Tax Digital made simple.
- Tori Lynn Crowther
- Dec 25, 2025
- 4 min read
Updated: 3 days ago
Making Tax Digital (MTD) – Practical Guide
1. What MTD Is
Making Tax Digital is HMRC’s system for modernising tax reporting. Instead of submitting one annual Self Assessment, you will:
Keep digital records of income and expenses
Submit updates every quarter
Complete a final end-of-year declaration
It changes how you report, not fundamentally how tax is calculated.
2. When It Starts
MTD for Income Tax is being introduced in stages:
Turnover (sole trader + property income) | Start Date |
Over £50,000 | April 2026 |
Over £30,000 | April 2027 |
Over £20,000 | April 2028 |
Important:
This is based on gross income (turnover), not profit
It applies to combined sole trader and rental income
3. Who It Applies To
You will be affected if you are:
A sole trader
A landlord
Earning above the thresholds above
You will not be affected (for now) if you only have:
Limited companies
PAYE employment
Dividend income
4. What You Will Have To Do
Digital Record Keeping
You must keep records in digital form using compatible software. This includes:
Income
Expenses
Dates and categories
Paper records alone will not be acceptable.
Quarterly Updates
Every 3 months, you submit a summary of:
Total income
Total expenses
These are not final figures. They are estimates and can be corrected later.
End of Year Final Declaration
At the end of the tax year you:
Confirm all figures
Make adjustments (e.g. accounting adjustments, allowances)
Submit the final position
5. How Many Submissions Per Year
Under MTD you will submit:
4 quarterly updates
1 final declaration
Total: 5 submissions per year instead of 1
6. When You Pay Tax
MTD does not change payment dates.
You will still pay:
31 January (main payment)
31 July (payment on account, if applicable)
Quarterly updates are for reporting only, not payment.
7. Penalties
MTD introduces a points-based penalty system:
Each missed submission = 1 point
When you reach a threshold → £200 fine
Late payment penalties and interest still apply
8. Software Requirements
You must use HMRC-compatible software such as:
Xero
QuickBooks
FreeAgent
You cannot manually submit figures through HMRC’s website in the traditional way.
9. How This Fits Your Situation
If your business is a limited company
You are not currently affected by MTD for Income Tax
You will continue under:
Corporation Tax
PAYE
Dividend reporting
If you have any sole trader income
That income may fall under MTD depending on turnover
You would need to comply for that portion only
10. Best Way to Prepare
Even if you are not required yet, adopting MTD-style systems early is beneficial.
Recommended approach:
Use accounting software now
Keep records updated weekly
Separate business finances clearly
Monitor turnover levels
11. Key Takeaways
MTD is about digital reporting and quarterly updates
It applies to sole traders and landlords, not limited companies (for now)
You still pay tax at the same times
Preparation early will reduce admin later
A note on business and professionalism
This guide assumes one thing: you are running a business, not a hobby.
Pet care is more than a passion—it’s your livelihood, and it deserves the same professionalism, planning, and respect as any other business. Treating it like “just a job for fun” won’t get you the results or freedom you want.
You are allowed to:
Charge enough to make your business sustainable
Set and enforce clear boundaries with clients
Expect respect from clients, peers, and the wider pet care industry
Take your work seriously, even when others don’t
Build a business that supports you, not just every pet and client
Professional success starts with self-respect—and pet care businesses built on self-respect thrive for the long term.
About Tori Lynn C. & The Dog House
Welcome to The Dog House — my cosy corner of the TLC Canine Crusaders Business Hub. I’m Tori Lynn C., the founder of TLC Dog Walking Limited, mentor to professional dog walkers, and lifelong advocate for dogs and the people who care for them. With over 17 years of hands-on experience in the industry, my mission is to guide you through the realities of running a successful, sustainable dog walking business — from client care and safety to wellbeing, confidence, and professional growth.
The Dog House is where I share the honest, behind-the-scenes conversations we all need: the tricky moments, the funny bits, the business lessons, and the mindset work that keeps us thriving rather than merely surviving. Whether you're just starting out or scaling up, you’ll always find support, guidance, and a friendly nudge forward here.
You’re never alone in this journey — you’re part of a community of canine crusaders.
Legal Disclaimer
The information provided on this website is for general information and educational purposes only. It is intended to support pet care professionals in understanding common legal considerations when operating a dog walking or pet care business in the UK.
This content does not constitute legal advice and should not be relied upon as a substitute for advice from a qualified solicitor or legal professional. Laws, regulations and local authority requirements may change over time and can vary depending on location and individual circumstances.
While every effort has been made to ensure the information is accurate and up to date at the time of publication, no guarantees are made regarding completeness or applicability to your specific situation.
By using this website, you acknowledge that:
✓ You are responsible for ensuring your own business complies with all relevant UK laws and local authority rules
✓ You should seek professional legal advice before drafting, using or relying on any contract or legal document
✓ The website owner accepts no liability for loss, damage or legal issues arising from the use of this information
If you are unsure about any legal obligations, contractual terms or liabilities, it is strongly recommended that you consult a solicitor experienced in small business or consumer law.
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