Making Tax Digital in Horsham

• What is Making Tax Digital (MTD)?
• Who needs to follow MTD?
• Key MTD deadlines and detailsthresholds
• How to sign up for MTD
• Choosing compatible software
• Why working with an accountant is still essential
• Trusted MTD support in Horsham – Sharon at RSB Tax
• Frequently asked questions about MTD
• Common mistakes and how to avoid them
• Benefits of digital tax filing
• Key HMRC resources and guidance
• Call to action – Contact Sharon at RSB Tax

What is Making Tax Digital (MTD)?

Making Tax Digital (MTD) is a UK Government initiative to modernise the tax system. It requires individuals and businesses to keep digital records and submit tax information using approved software instead of paper forms or the old HMRC online portal. The goal is to reduce errors and make taxes easier. In fact, MTD is part of HMRC’s plan to digitalise UK tax fully. Key points to understand about MTD:

• It’s not optional. Eventually, almost everyone will have to follow MTD rules – first VAT businesses, then self-employed folks and landlords.
• It’s not just filing your return online. Under MTD, you’ll send quarterly updates of income and expenses through software, then a final year-end report (this final report will replace your usual Self Assessment tax return).
• Payment deadlines aren’t changing. You do not have to pay tax quarterly – you still pay your tax bill annually (or twice a year if you make payments on account), just like before. MTD only changes how often you report information, not when you pay.
• You must use compatible software. You can’t simply type figures into the old HMRC website forms. MTD requires using MTD-compatible software or apps to record and submit your tax data. Don’t worry – there are many easy software options (more on that below).

Think of MTD as HMRC going digital. Instead of one big tax return a year on paper or HMRC’s site, you’ll maintain digital records and send smaller reports more frequently. This can actually help you keep on top of your finances and avoid last-minute stress.

Who needs to follow MTD?

MTD currently affects:

• VAT-registered businesses: If you are registered for VAT, you must use MTD for your VAT returns. Since April 2022, all VAT-registered businesses (even below the £85,000 turnover VAT threshold) are required to keep digital records and file VAT returns through MTD-compatible software. So if you charge VAT, you should already be following MTD for VAT.
• Self-employed individuals and landlords (Income Tax): MTD is being extended to Income Tax Self Assessment (sometimes called MTD for ITSA). This will apply to sole traders and landlords with total yearly business or rental income above certain thresholds. It starts in April 2026 for those earning over £50,000, then in 2027 for those over £30,000. Eventually, it’s planned to include people earning above £20,000 per year by 2028. (If your income is £20,000 or below, you won’t be required to use MTD for Income Tax for now.)

In short, if you run a business or have property income, you’ll likely need to comply with MTD either now or in the next few years. For example:

• A Horsham landlord with £40,000 rental income will need to join MTD for Income Tax by April 2027 (since £40k is above the £30k threshold in that phase).
• A self-employed consultant earning £55,000 will start using MTD by April 2026 (over £50k threshold).
• If you’re VAT registered, you should already be using MTD for your VAT returns regardless of income.

Note: There are a few exemptions. If going digital is genuinely impossible for you (due to age, disability or remote location with no internet) or if your religion forbids technology, you can apply to HMRC for an exemption from MTD requirements. But these are granted only in exceptional cases. For most people, it’s best to plan on using MTD when it’s your turn.

Key MTD deadlines and thresholds

MTD rollout timeline 2019–2028: VAT was first (from April 2019 for larger businesses and April 2022 for all VAT-registered businesses), followed by Income Tax Self Assessment from April 2026 (starting with higher earners and phasing in others by 2027–28). To comply with MTD, you need to know when it starts for you. Here are the key dates and thresholds to mark on your calendar:

• April 2019 (MTD for VAT begins): Businesses with taxable turnover above £85,000 had to start using MTD for VAT from April 2019.
• April 2022 (MTD for all VAT businesses): From 1 April 2022, all VAT-registered businesses must follow MTD for VAT – even if your turnover is below £85,000. (This meant even small businesses that registered for VAT voluntarily have to use digital records and filing.)
• April 2026 – MTD for Income Tax starts: If your total gross income from self-employment and/or property is over £50,000 (using the 2024–25 tax year as reference), you will enter MTD for Income Tax from 6 April 2026. This means the tax year starting 6 April 2026 will be the first where you must keep digital records and send quarterly updates.
• April 2027 – next phase for Income Tax: If your income is over £30,000 (but not above £50k) for the 2025–26 year, you’ll need to start using MTD from 6 April 2027. This catches the next group of self-employed people and landlords.
• April 2028 (planned) – smaller incomes: The government has plans to lower the MTD threshold to £20,000 in a later phase. This could mean that from April 2028, those earning above £20k will be included. (As of now, if your business/property income is £20,000 or below, you won’t be mandated to join MTD for Income Tax. HMRC will review how to bring in this group in the future.)
• Partnerships and companies: General partnerships (businesses with partners) will be brought into MTD for Income Tax later – HMRC has not set a date yet. And MTD for Corporation Tax (for limited companies) is still in planning stages, likely no earlier than 2026. So if you operate through a limited company, MTD rules for corporation tax returns are not required yet.

Keep these dates in mind so you know when you must be ready. HMRC has said they will send letters to notify people before their start date. But you don’t want to leave preparation to the last minute. In the next sections, we’ll show how to get set up well ahead of time.

How to sign up for MTD

Signing up for Making Tax Digital is not difficult. It’s a process you can do online, and you only need to do it once for each tax (VAT or Income Tax) when you become mandated. Here’s a step-by-step guide: 1. Make sure you have an HMRC online account (Government Gateway). If you’ve filed taxes online before, you likely have a Government Gateway user ID and password. If not, you’ll need to create one on HMRC’s website. This account is how you’ll access HMRC services. 2. Choose MTD-compatible software first. Before signing up, decide what software you will use for keeping records and submitting returns (see the next section on choosing software). HMRC requires you to use approved software, so have one in mind. In fact, for some taxes, you sign up through your software. For example, many accounting apps will guide you to connect to HMRC and enroll in MTD within the app. If you’re signing up for MTD for VAT, you can also do it on HMRC’s site directly – but you’ll still need software to file the VAT returns. 3. Gather your business info. Have on hand details like your business name, address, VAT number (if signing up for VAT), National Insurance number (for individuals), and the date your business started or you began receiving rental income. You’ll also need the email address for your HMRC account, and your Government Gateway login credentials. 4. Go to the official sign-up page. To sign up for MTD for VAT, visit HMRC’s “Sign up for Making Tax Digital for VAT“ page and follow the prompts. To sign up for MTD for Income Tax, most users will sign up through their software (your software provider will have instructions). If you’re doing it directly, HMRC’s guidance page for MTD Income Tax provides a link and details on signing up. (Remember, if you use an accountant or tax agent, they can do the sign-up on your behalf as well.) 5. Complete the sign-up and wait for confirmation. You’ll fill in your details and submit the sign-up form. HMRC will usually send a confirmation email within a few days. For VAT, do not submit any VAT return in the old way once you’ve signed up – wait for the email confirming you’re in MTD. For Income Tax, once you’re signed up (when it’s your time to join), you will start using your software to send updates from the next tax year. After signing up, everything related to that tax must be done via MTD methods. For instance, once enrolled in MTD for VAT, you must submit all VAT returns through your software, not through HMRC’s old online VAT portal. If you’re enrolling in MTD for Income Tax, you’ll begin sending quarterly updates through software and stop filing the old annual Self Assessment form (it gets replaced by the new process). Pro tip: Don’t wait until the last minute. It’s wise to sign up before the deadline when MTD becomes mandatory for you. HMRC even allows early voluntary sign-ups – some people choose to opt in early to get used to the system. But if you’re unsure, you can continue with your normal Self Assessment until you are required to switch.

Choosing compatible software

One of the biggest changes with MTD is that you must use compatible software to keep your records and submit updates. The good news is there are many options, and you might find they actually make bookkeeping and tax filing easier for you. Here’s how to choose:

• Check HMRC’s approved software list. HMRC provides a list of software that works with MTD for VAT and Income Tax. This list includes well-known accounting programs and some free or low-cost tools. Make sure whatever you pick is on this list (or officially stated as MTD-compliant) so you know it can connect to HMRC.
• Decide on features you need. If you’re a small self-employed individual with straightforward finances, you might prefer a simple app. If you run a more complex business, you may need fuller accounting features (invoicing, payroll, etc.). Consider things like: do you want the software to connect to your bank, manage invoices, or just record income and expenses?
• Popular MTD software options: Some of the most popular choices are QuickBooks Online, Xero, Sage, and FreeAgent. All of these are MTD-compatible and user-friendly. (FreeAgent is even free if you have a business current account with certain banks, like NatWest). Other options include Zoho Books, ClearBooks, Crunch, and many more. Even spreadsheet users can comply by using bridging software – a tool that links your Excel or Google Sheets to HMRC. If you love spreadsheets, look for “MTD bridging software“ on HMRC’s list.
• Try before you commit. Most providers offer free trials or demos. It’s a great idea to test out a software now, before MTD mandates kick in. For example, you could input a month’s worth of dummy income/expenses and see how the software generates a tax update. Pick the one you find easiest to use.
• Consider your accountant’s advice. If you have an accountant, ask them which software they recommend or support. Many accountants are familiar with specific programs and can get you set up on those easily. In some cases, accountants can provide you access to their software of choice (some practices use their own portals or have partnerships with software companies).

Remember, the goal of the software is to simplify your life. Once you’re used to it, you might spend less time on tax stuff than before, because good software can pull in data (like bank transactions), help you categorise income and expenses quickly, and even give you estimates of tax due. It’s worth investing a bit of time to choose the right one for your needs.

Why working with an accountant like RSB Tax is still essential

You might wonder, “If everything is going digital, do I still need an accountant?“ For many self-employed people and landlords, the answer is yes – an accountant or tax professional can be more important than ever during the switch to MTD. Here’s why:

• Expert guidance: An accountant who understands MTD can guide you through the transition. They’ll explain what you need to do and by when. If you’re confused about the rules or thresholds, they can clarify them for you.
• Software and setup help: Accountants often help clients choose and set up the right software. If bookkeeping isn’t your strength, they can either train you on using the software or even handle the record-keeping for you. Many accounting firms in Horsham and beyond are already familiar with MTD software and can get you onboarded smoothly.
• Accuracy and compliance: While MTD software reduces a lot of data entry errors, it doesn’t automatically guarantee everything is correct. You still need to know what counts as allowable business expenses, how to categorise transactions, and so on. An accountant will ensure you’re doing things correctly so that your quarterly submissions are accurate. They’ll also help with the end-of-year finalisation, making sure you’ve claimed all your deductions and that the tax calculation is right.
• Staying up-to-date: Tax rules can change, and software can update. Accountants stay on top of these changes. For example, if HMRC tweaks a rule about how something should be reported, your accountant can advise you. Essentially, they help you not get caught out by surprises.
• More than just compliance: Importantly, a good accountant doesn’t just help you follow the rules – they help you make the most of them. They can do tax planning (legitimately reducing your tax bill), give business advice, and generally save you time. With the routine stuff digital, you can focus your energy on your business while they handle the tricky tax bits.

Finally, having an accountant gives peace of mind. Knowing a professional is keeping an eye on your tax compliance means you’re less likely to miss deadlines or make costly mistakes. It’s like having a safety net, especially as HMRC introduces these new digital requirements.

Trusted MTD support in Horsham – Sharon at RSB Tax

When it comes to navigating Making Tax Digital, having a trusted local expert can make all the difference. In Horsham, RSB Tax is a go-to resource for many small business owners and landlords, and for good reason. Sharon, the founder of RSB Tax, is an experienced tax professional who understands the ins and outs of MTD and how it impacts individuals in our area. Who is Sharon? Sharon Bristow (founder of RSB Tax in Horsham) has been helping clients with taxes for over 20 years. She originally trained at the Inland Revenue (now HMRC), so she knows how things work on the inside. After gaining experience in various accountancy firms, she started her own practice in Horsham. In other words, Sharon has decades of tax expertise and a deep understanding of UK tax law and HMRC procedures. Why trust RSB Tax for MTD? Aside from her qualifications and experience, Sharon has stayed at the forefront of the Making Tax Digital changes. She has guided many clients through the transition already – from getting onto MTD for VAT to preparing for the upcoming MTD for Income Tax rules. Clients often praise her friendly, down-to-earth approach. She can explain technical tax stuff in plain English (with patience, too!), which is exactly what beginners need. At RSB Tax, you can get one-on-one support for MTD. For example, Sharon can help you:

• Determine when MTD applies to you and get you registered on time.
• Choose and set up MTD-compatible software that suits your business.
• Train you (or your bookkeeper) on how to record income/expenses digitally and submit the quarterly reports.
• Troubleshoot any issues with HMRC (like if something doesn’t seem to submit correctly).
• Make sure your year-end final submission is complete and accurate, so you don’t pay more tax than necessary.
• Stay compliant with all the latest HMRC guidance related to MTD.

Sharon’s firm, RSB Tax, is right here in Horsham, so she understands the local business community. It’s reassuring to know you can call up a real person (or drop by the office) and get help tailored to your situation. Many software providers offer support, but it’s not the same as having someone who knows you and your business. RSB Tax provides that personal touch. Bottom line: If you’re feeling overwhelmed by Making Tax Digital, Sharon at RSB Tax in Horsham is a trusted expert who can hold your hand through the process. She’s already helped many like you make a smooth transition to digital tax filing. In the next section, we’ll tackle some frequently asked questions – many of which Sharon often answers for newcomers.

Frequently asked questions about MTD

Is Making Tax Digital mandatory?

Yes – if you fall into the groups that HMRC has specified, it’s mandatory. Right now, all VAT-registered businesses must use MTD for VAT. From 2026 onwards, many sole traders and landlords will be required to use MTD for Income Tax, starting with those earning over £50k, then £30k, etc. Eventually, most people who file business or rental income taxes will be under MTD. If you’re under the threshold or exempt, you can continue as normal for now, but HMRC plans to bring more people in over time.

Do I have to submit a tax return every quarter now?

Not exactly. Under MTD for Income Tax, you will submit quarterly updates (4 per year, each showing your business income and expenses for that quarter). But these are summaries, not full tax returns. After the fourth quarter, you’ll still submit a final end-of-year declaration to confirm everything and add any other income or adjustments. This final declaration replaces the old annual Self Assessment tax return. So you’re reporting quarterly plus doing a year-end final step. Think of the quarterly reports as building blocks, with the final report wrapping up the year.

Will I have to pay my tax bill in instalments because of quarterly reporting?

No, your payment deadlines remain the same as they are now. Even though you send information quarterly, you still pay tax yearly (with the usual January 31 deadline, and July 31 for payments on account if those apply). MTD itself doesn’t change how or when you pay tax – it only changes how you report the numbers to HMRC. (Of course, you can make voluntary payments or budget quarterly if you want, but that’s up to you. HMRC will provide an estimated tax due after each quarterly update to help you budget, but you won’t be required to pay until the normal due dates.)

What if I can’t get online or handle the digital tools?

HMRC recognises that a small number of people can’t use digital services. If you have a genuine reason (such as a severe disability, or you’re in a very remote area with no internet, or a religious objection to technology), you can apply for a digital exemption. If approved, you’d be allowed to continue using paper forms or old systems. However, these exemptions are rare – HMRC will expect most people to comply. If you’re not comfortable with computers, this is a great time to seek help from an accountant or a tech-savvy friend/family member to get you set up. The software interfaces are designed to be as user-friendly as possible, and with a bit of initial help, many non-techy users do fine.

Can I use spreadsheets or do I need fancy accounting software?

You can still use spreadsheets to record data, but to be MTD-compliant, the spreadsheet must be linked to HMRC through “bridging software.“ Bridging software is a simple program that takes the figures from your spreadsheet and submits them to HMRC in the required format. Some people keep their books in Excel and then use a bridging tool to file each quarter. However, many are finding it easier to switch to a full software package that does everything in one place. It’s up to you – just ensure whatever method you choose is MTD-approved.

Will MTD make my taxes more accurate?

It can. The aim of MTD is to reduce errors that happen with manual data entry or shoeboxes of receipts. By using software that pulls data directly (for example, from your bank or from photos of receipts), there’s less chance of mistyping numbers. In fact, a survey found that a majority of businesses felt MTD gave them more confidence in getting their taxes right and reduced mistakes. That said, the accuracy still depends on you inputting and categorising things correctly. MTD is a tool – used well, it should improve accuracy and even give you a clearer real-time picture of your finances.

What are the penalties if I mess up or miss a filing?

HMRC is introducing a new points-based penalty system with MTD. Essentially, every time you miss a submission deadline, you get a point. If you accumulate a certain number of points (for quarterly filers it’s four points), you’ll incur a fine of £200. After that, every additional miss is another £200 fine. Points can reset if you have a long period of compliance (e.g. 12 months with no misses), but if you miss again, the fines kick in again. There are also penalties for late payment of tax (interest and fines), and a one-time fine if you fail to use proper software to file. In short, don’t ignore the MTD rules – missing filings will cost you. The good news is HMRC usually gives a bit of leeway as people adjust, but it’s best to form good habits from the start.

Have more questions? Feel free to reach out to RSB Tax in Horsham. Sharon has likely heard it all and can give you answers specific to your situation! Have more questions? Feel free to reach out to RSB Tax in Horsham. Sharon has likely heard it all and can give you answers specific to your situation!

Common mistakes and how to avoid them

Transitioning to Making Tax Digital might be a learning curve. Here are some common mistakes people make with MTD – and tips on how you can avoid them:

• Waiting until the last minute to prepare: A lot of folks procrastinate and only think about MTD a few weeks before their start date. This can lead to panic, hasty decisions, or even missing the deadline. Avoidance tip: Start early. As soon as you know MTD will apply to you (and you have a start date), begin exploring software and getting comfortable with digital record-keeping. Give yourself at least a few months to prepare – you’ll thank yourself later.
• Not signing up or forgetting to enroll: Simply using software doesn’t mean HMRC knows you’re under MTD. You do need to go through the sign-up steps. Some forget this and continue filing the old way, which can lead to penalties. Avoidance tip: Mark the sign-up date on your calendar. After your last “old“ tax return (for example, the 2024–25 tax return due by Jan 2026 if you’re in the first wave), make sure to register for MTD so that from April 6th you’re in the system.
• Choosing the wrong software (or none at all): If you pick software that isn’t a good fit, you might struggle or give up. Or worse, some people think they can do MTD without software and try to manually enter data somewhere – which isn’t allowed. Avoidance tip: Do your homework on software. Use HMRC’s list and the guidance earlier in this article to pick a suitable app. If you’re not sure, ask an accountant or others in your industry for recommendations. And definitely use software – it’s mandatory.
• Not keeping digital records consistently: MTD works best when you update your records regularly. A mistake is treating it like the old system – waiting until year-end to add up everything. If you do that, quarterly updates will be painful. Avoidance tip: Stay on top of your bookkeeping. Try to log your income and expenses as you go (e.g., weekly or monthly). Many software tools allow you to connect your bank feed, making this easier. Regularly updating means your quarterly submissions can be done with a few clicks, rather than a frantic paperwork hunt four times a year.
• Ignoring the need to align your accounting year (for businesses with odd year-ends): This is a bit technical, but if you’re self-employed and not using April–March as your accounting year, there’s a new rule called basis period reform. It means by 2024/25 you’ll likely have to switch to the tax year basis. Some might overlook this and face overlap issues. Avoidance tip: Check your accounting year. If you currently prepare accounts to a date other than March 31 or April 5, talk to an accountant about changing it or handling the transition correctly. This will ensure MTD quarterly dates line up with your business year.
• Not seeking help when confused: Some people feel they have to figure it all out alone and hesitate to ask for help, leading to mistakes. Avoidance tip: Don’t be shy to get support. HMRC has guidance and even webinars on MTD. More importantly, local accountants like RSB Tax are ready to assist. A quick question to an expert can save you hours of stress or correcting an error later.

By being aware of these pitfalls, you can take steps to avoid them. Making Tax Digital is new for everyone, so if you stumble a bit, that’s okay – just learn and adjust for next time. Once you get into a routine, you’ll likely find MTD quite manageable.

Benefits of digital tax filing

Moving to digital tax filing might seem like a hassle at first, but it comes with real benefits for taxpayers. Here are some of the positive outcomes you can look forward to with Making Tax Digital:

• Fewer errors: When using software, calculations are done automatically and data flows directly from your records to HMRC. This greatly cuts down on mistakes like typos or arithmetic errors. In fact, a majority of businesses surveyed reported increased confidence that they were getting their tax right and felt MTD reduced the potential for mistakes.
• Time savings: Digital record-keeping means no more sifting through piles of receipts and manual ledger books (or Excel spreadsheets) at year-end. Many users find that preparing and submitting returns is faster with MTD. For example, if your software links to your bank, it can automatically sort a lot of your transactions. Come quarter-end, you just review and send. No need to manually fill in forms on HMRC’s site.
• Better financial insight: Because you’re updating records regularly and seeing summaries every quarter, you get a more up-to-date picture of your business finances. This can help with budgeting and cash flow management. HMRC even provides an estimated tax calculation after each quarterly submission, so you’re not hit with surprises at year-end. It’s easier to set aside money for your tax bill when you have an idea of the amount throughout the year.
• More organised records: MTD encourages good record-keeping. Storing everything digitally (and maybe even scanning your receipts into the software) means all your documents are neatly kept in one place. It’s simpler to retrieve any record if needed. Plus, digital records meet HMRC’s requirements so you’ll be compliant in case of any future audit.
• Environmentally friendly: Less paper! Moving to digital filing means you won’t be printing out forms or sending paperwork by mail. It’s a small win for the environment – and it reduces physical clutter in your office too.
• Future-proofing: The world is going digital, and HMRC is not an exception. By adopting MTD, you’re essentially future-proofing your tax affairs. You’ll be ready for any further digital integrations, and you’re likely to be using tools that can adapt to new rules easily via updates. It’s harder to be “left behind“ when you’re already on the digital platform.
• Potential for tax planning opportunities: With data updated frequently, your accountant (if you have one) can review your situation during the year and give timely advice. For instance, they could suggest actions before year-end to save on taxes. In the old system, accountants often saw your numbers long after the year ended (when preparing your tax return), which can be too late to act. MTD enables a more proactive approach.

Overall, while the adjustment might take a bit of effort, many businesses and individuals find that digital tax filing makes their lives easier in the long run. It’s like switching from a manual gearbox to an automatic – a change in habit at first, but ultimately a smoother ride!

Key HMRC resources and guidance

For those who want to read straight from the source or get additional help, here are some official HMRC resources on Making Tax Digital:

• HMRC: Overview of Making Tax Digital – The government’s main information page on MTD, covering both VAT and Income Tax updates.
• Check if and when you need to join MTD for Income Tax – A handy HMRC tool and guidance to determine your start date and obligations for MTD for ITSA.
• Sign up for Making Tax Digital (Income Tax) – Official guidance on how sole traders and landlords can sign up for MTD for Income Tax, including prerequisites and step-by-step instructions.
• Sign up for Making Tax Digital (VAT) – Official guidance for signing up for MTD for VAT and what you need to do (you can find this on GOV.UK under “Sign up for MTD VAT”). Key point: all VAT businesses should have done this by April 2022.
• MTD-Compatible Software list – HMRC’s list of software products that are compatible with MTD. There are separate lists for Income Tax software and VAT software (including some free options). Check here before choosing your application.
• Apply for MTD exemption – Guidance on how to apply if you believe you meet the criteria for digital exclusion and need exemption from MTD requirements.
• HMRC MTD Webinars and Help – HMRC occasionally runs webinars to help businesses get ready for MTD and publishes updates in their news section. Keep an eye on HMRC’s MTD help page for tutorials and the latest announcements.

These resources are a great starting point if you want more detailed technical info or have specific questions. Of course, if digging through HMRC documentation isn’t your cup of tea, you can always ask an accountant (like RSB Tax in Horsham) to interpret the rules for you!

Call to action – Contact Sharon at RSB Tax

Making Tax Digital is a big change, but you don’t have to go through it alone. If you’re a self-employed individual or landlord in Horsham (or the surrounding area) and want personal guidance, reach out to Sharon at RSB Tax. Sharon and her team have the expertise to make your transition to MTD smooth and stress-free. 👉 Contact Sharon at RSB Tax in Horsham today on 01403 259270. She’ll be happy to talk about your situation, explain what steps you need to take, and even handle much of the process for you if you prefer. You can also visit the website (rsbtax.co.uk) or email Sharon at sharon@rsbtax.co.uk for more information. Don’t let the new digital tax requirements intimidate you. With the right support and knowledge, you can confidently “Make Tax Digital“ for your business. Give Sharon a call and take the first step towards hassle-free digital tax filing. Your future self – and your finances – will thank you!