Who Qualifies for Making Tax Digital and How I Can Help You Navigate the Process

If you’re a sole trader, landlord, or small business owner, you’ve probably started hearing more and more about Making Tax Digital (MTD). For many business owners, the biggest question is:

“Do I actually need to do this?”

The short answer is — probably yes, eventually. And the important thing to understand is that the thresholds are based on your gross income (turnover), not your profit.

That means the full amount you invoice customers usually counts towards the threshold — including materials used for jobs.

Digital tax software dashboard on laptop screen

What Is Making Tax Digital?

HM Revenue and Customs introduced Making Tax Digital to move tax reporting online and make bookkeeping more accurate and up to date.

Instead of submitting one Self Assessment tax return each year, businesses that fall into MTD will need to:

• Keep digital accounting records

• Use compatible software

• Submit quarterly updates to HMRC

• Send a final year-end declaration

  
  

For many small businesses, this is a big change from spreadsheets or manual bookkeeping.

Who Qualifies for MTD?

The rollout is happening in stages based on your gross income:

• Over £50,000 gross income → MTD starts from April 2026

• Over £30,000 gross income → MTD starts from April 2027

• Over £20,000 gross income → MTD starts from April 2028

  
  

These thresholds apply to self-employed individuals and landlords.

What Counts as Gross Income?

This is where a lot of trades and service businesses get confused.

Your gross income is usually the full amount you charge your customer before expenses are deducted.

Example:

• Labour: £1,500

• Materials: £500

➡️ Gross income = £2,000

The materials are then recorded separately as a business expense/cost of sales.

A lot of businesses accidentally think they should only include the labour amount, but for most trades and service businesses, that is not correct.

Why Businesses Are Feeling Overwhelmed

Many business owners are already juggling:

• Running jobs and managing customers

• Invoicing and cash flow

• Admin and paperwork

• Family life and day-to-day responsibilities

  
  

Now MTD adds:

• New software

• More frequent reporting

• Digital bookkeeping requirements

• Pressure to keep records updated regularly

  
  

If bookkeeping already feels stressful, it’s understandable why MTD feels overwhelming too.

How I Can Help

At Steph’s Business Studio, I help businesses across Witney & Oxfordshire get organised with practical, supportive bookkeeping help. I can help you:

• Understand whether MTD applies to you

• Set up MTD-compliant bookkeeping systems

• Get organised with accounting software

• Keep your records accurate and up to date

• Reduce stress around quarterly reporting

• Understand your numbers clearly

  
  

Getting Prepared Early Matters

Even if MTD doesn’t apply to you yet, getting your bookkeeping systems in place now can make the transition much easier later. Good bookkeeping is not just about tax compliance — it also helps you:

• Understand your business finances

• Improve cash flow awareness

• Reduce mistakes

• Feel more confident running your business

  
  

Need Help With MTD or Bookkeeping?

If you’re unsure where to start, I’m here to help. Whether you need bookkeeping support, help choosing software, or guidance getting MTD-ready, we can work through it together in a way that feels manageable and clear.