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Join for freePosted: Thu 9th Jul 2026
Is your business ready for Making Tax Digital? Here's what you need to do now before the upcoming August deadline.
Making Tax Digital (MTD) for Income Tax Self Assessment is already here.
And if you're self-employed or a landlord earning over £50,000, you must already be keeping digital records and submitting quarterly updates to HMRC.
With your first quarterly update deadline hitting on 7 August 2026, there's no time to waste.
Watch this informative webinar, including a Q&A, where we clear the confusion and give you an action plan you can follow to stay on top of your MTD obligations.
What Making Tax Digital means for Self Assessment – and what's changed
Your key upcoming deadlines, starting with 7 August 2026
How to keep digital records and submit quarterly updates to HMRC
Recommended software and accounting tools that meet MTD requirements
Practical steps to get compliant now and avoid penalties
Common challenges and how to overcome them
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Lightly edited for clarity.
Amy: Hello, everybody, and welcome to today's Tech Hub webinar. My name is Amy. I'm a programme manager at Enterprise Nation, and it's great to have you with us today.
If you are new to Tech Hub, this is a collaboration between Google, Sage and Enterprise Nation. It's been designed to support small businesses to access the tools and technology they need to run and grow their businesses with confidence.
If you've not already done so, I encourage you to take the Tech Hub diagnostic to receive personalised recommendations for your business.
I'll be dropping the link in the chat. You can also explore other free events that we've got taking place, focused on practical digital solutions.
Today, we are joined by Chris Downing, director of accounts and bookkeepers at Sage, who will be guiding us through everything you need to know about Making Tax Digital for Income Tax Self Assessment, and how to get compliant before the August deadline.
Over the next 45 minutes, Chris is going to walk us through what MTD for Income Tax Self Assessment means in practice, your key deadlines starting with 7 August, how to keep digital records and submit quarterly updates to HMRC, and which software tools make compliance straightforward.
The session will give you a clear action plan to get MTD-ready and avoid any penalties.
If you've got any questions throughout the session, please add them into the Q&A box. We will try to answer them as we go and also host a Q&A at the end. Try to avoid asking questions in the chat because they can get a little bit lost there.
Also, a reminder that this webinar is being recorded, and we'll send a follow-up email later today with the recording and some further resources.
Without much further ado, I'll hand over to you, Chris.
Chris: Thank you very much, Amy.
Welcome, everyone, to this afternoon's slightly warm webinar all about Making Tax Digital. And it is hotting up. We've got less than a month until 7 August, when your first quarterly update for MTD is due, if you are mandated.
The point of this session is to give you everything you need to know, understand and appreciate about Making Tax Digital, so you have the clarity, the confidence and the understanding of what to do next.
Whether you're a sole trader, a landlord or an individual with a bright idea who wants to start your own business, it's very important to understand what your responsibilities are.
I'm an accountant by trade and have been for 20 years. I've been very much buried in the detail of Making Tax Digital, talking about legislation, software, and speaking to accountants, bookkeepers and business owners.
So if you've got any questions at all, please drop them into the Q&A, and I'll do my best to weave them throughout or leave them towards the end.
I have a lot of content. It's going to be pacey because it is quite an expansive subject, but hopefully I'll give you the clarity you need.
The key theme is that this is a change in how you keep and share information. This isn't a brand new tax.
When people think about Making Tax Digital, or any new legislation, they think: "What new tax do I have to manage and get ready for?"
It's not that at all. It's about how you maintain and keep your records, and how regularly you share information with HMRC. I'm going to give you clarity on what that actually looks like.
Today, we'll cover what's happening, why it's happening, who's affected, who may not be affected, and what the process looks and feels like in terms of what you need to do.
We'll also look at what the changes are, whether you're going from paper records to digital records, what's involved, what you need to include and what your plan should be to get ready.
So who's on the call? Where are you starting?
You don't have to put it in the chat because you may not want to share where you are. But think about these questions and where you are with Making Tax Digital.
Are you already using bookkeeping software? Fantastic. You're already on the first step.
Alternatively, you may be using spreadsheets, Excel or Google Sheets, but wondering whether that's going to be MTD-compliant. How are you going to share information, keep it together and share it with HMRC?
Alternatively, you might be a business owner who runs the business, but bookkeeping is not your thing. You share information once a year with your accountant or bookkeeper, and they sort it all out for you. They do the books, do the tax return, tell you what you need to pay and keep you compliant.
Or you might be on this webinar and not quite sure whether MTD applies to you, and you just want more information. Everything we're going to discuss should answer those queries.
Let's get into the detail. What is Making Tax Digital, and why is it happening?
At the moment, we're all used to Self Assessment. We understand that if you're self-employed, a sole trader, a landlord or maybe you have income on the side, you have to file a tax return once a year by 31 January.
Think about what that process looks like. You're maintaining or keeping receipts. You may have a shoebox, an envelope or a pile in the corner. You've got receipts, bank statements and details of income received.
You either update your own spreadsheet, or you give the paper records to your accountant. The accountant deals with it, asks you questions and hopefully gets your tax return done, telling you what you need to pay without too much of a rush.
Even though we know this is happening, it tends to be a bit of a surprise to everyone. People hold off and delay because they're trying to put off understanding what that tax number is, even though the tax liability still only has to be paid by 31 January.
I appreciate you have payments on account in January and July, but there tends to be a mad rush. People put it off.
There's nothing wrong with the annual system in principle, but it is slightly broken. It compiles all this effort into a short period of time.
When you consider that there are 12 million tax returns filed each year, 4.5 million are filed in January and another several million in December. That means people are sharing information, collating information and doing a lot of work in a couple of months.
If you leave it to the last moment, you're collating information from 18 months ago.
Naturally, you're going to be concerned. Have I captured all the information? Am I claiming all the expenses I could claim? Is my tax liability correct?
Let's try to remove that anxiety, remove that friction and provide more confidence. That's what MTD is going to deliver.
The principle around Making Tax Digital is to keep records in a more regular, structured and informative format.
Rather than trying to bring everything together in one rush and considering what you spent 18 months ago or 15 months ago, and what that expenditure on the bank statement actually relates to, you're avoiding the last-minute mass of queries.
Your records are digitised. They're more accessible and more regular. It's easier to capture information, and more importantly, there are fewer queries.
You can seek tax guidance, advice or planning from your accountant or bookkeeper, if you have one, and share information on a more regular basis with that professional.
That means fewer surprises. More importantly, it means greater visibility of your business performance throughout the whole year and, hopefully, what your tax estimate is going to be, so you can put money to one side.
MTD is trying to improve four themes.
The first is record accuracy. It's about removing gaps in information and ambiguity around what a transaction relates to.
The second is reducing administration. When you think about MTD, yes, it's spread throughout the whole year. We'll go into the reporting requirements in a moment. But all the time you currently compound in one fashion will now be spread throughout.
The third is getting the information you need and understanding where your business is.
The fourth is the value that software brings. Information efficiency makes you more productive, but also more connected to a modern tax system.
When you consider where MTD sits in terms of the digitisation of records, we'll be in a situation where you're more informed. You'll have nudges and prompts in terms of data sources, which may be coming from other areas.
When you see where UK PLC sits from about 2029 or 2030, themes such as invoicing will come into play, which means that when you're transacting from one business to another, your invoices will naturally have to be digitised.
This is the first stepping point in terms of improving the overall system and removing friction in maintaining records.
Let's validate who's confirmed, who's in, who's out and who may need to think about it in the short term.
Making Tax Digital is going to affect sole traders, people who are self-employed, those who run a trade or may have a bit of vocation on the side, and individuals who own property and rent it out, meaning landlords.
It does not include limited companies, partnerships or trusts. It does not include you if your only source of income is employment or pension income.
This is all about you if you're a self-employed sole trader, whether you're a butcher, baker, candlestick maker or hairdresser. You may have a side hustle, selling goods on eBay or Vinted for a profit, or buying goods and reselling them. Alternatively, you may own property and rent it out. That's where MTD is going to affect you.
More importantly, it's about the detail of gross income and what crystallises your need to maintain records.
Once you've identified who you are and what you do, whether you're a sole trader or landlord, the key theme is when you come into Making Tax Digital. It's all based on your qualifying income.
MTD is happening for real from April this year. If your gross income, and I mean gross income, your total sales or rent received, was more than £50,000 on your 2024 to 2025 tax return, the tax return you submitted by 31 January 2026, you need to be in MTD this year from 6 April 2026.
So it's about maintaining digital records and submitting quarterly updates, which I'll talk about.
From next year, that threshold drops down to £30,000. So it's capturing more individuals.
For example, if your turnover, sales value or total gross rental income, which you report on your 2025 to 2026 tax return, is more than £30,000, you'll come in from 6 April 2027.
Then the following year, the threshold drops down by another £10,000. So the key theme from HMRC is a graduation of different cohorts based on turnover or gross income values over a three-year period.
It's not going to be a big bang, with three million people coming in all at once. It's going to be a phased launch. Around 850,000 this year, 1.1 million from April 2027, and another 900,000 from April 2028.
Clearly, the question is: what about those below £20,000? There is no confirmation yet in terms of when that will come into play, but inevitably, everyone's going to move to the new digital format.
There will probably be announcements soon for those below the threshold or with other different sources of income. They may need to start filing their tax returns no longer via the HMRC portal, but via software instead.
Let's zoom into what gross income really means. This is really important to get right.
Gross income is not profit. We're talking about your sales and your rent value received. It's not the profit number. It is the total sales value, total income received and total rent received.
For example, if you think about your profit and loss account from last year, or the books that you maintain, it's not the bottom-line number. It's the total sales value itself, not the profits.
That's the key theme to get right first time. Then we can break it down.
When you think about total gross income, it is the total gross income from both sole trade, meaning self-employment, as well as property.
For example, in example A, you are a plumber. Your total sales value is £55,000. Your qualifying income is £55,000. Clearly, you come into Making Tax Digital this year because that's what would have been reported on the previous tax return.
However, let's say your plumbing business is only turning over £35,000. You're a sole trader, and that's the sales value. But you own a property and rent that out on a monthly basis, generating total gross rent of £20,000.
This is where it's clearly defined as total gross qualifying income. You'll be adding your self-employed income as well as your property income. In this example, £35,000 plus £20,000 totals more than £50,000. It's £55,000.
So even though your self-employment income is below £50,000, and even though your property rental income is below £50,000, adding them together triggers that total gross income threshold.
However, let's assume that you're not self-employed. You're employed. You could be a director of your own limited company, or employed by another business.
Your employment salary, let's say, is £45,000. But you still own a property and rent that out every year, generating £15,000 of gross rent per annum.
The key theme here is that the employment is ignored. It is only the property income that you include in the qualifying income.
So because the property income is below £50,000, below £30,000 and below £20,000, you're excluded from Making Tax Digital.
That's why it's so important to understand the detail.
Employment, what you get in your payslip through PAYE, is excluded from the calculation. Pension income is excluded. Interest received is excluded. Capital gains on selling an item, a chattel or a property are excluded, and dividends are excluded.
It's all about self-employment and property, so it's important to get that right.
Property can bring additional complexity because you could own more than one property. You may own multiple properties and have to manage the various different rents received.
You may also own property with other individuals, whether it's your spouse, your best mate or other family members, and the total rent value needs to be split down between those various individuals.
If you have additional self-employment on the side, it's looking at the complexity of maintaining the records for your property as well as your self-employment.
Life becomes a little bit easier if you have separate bank accounts because it gives clarity.
However, if you do have separate bank accounts, you may have property expenditure happening in your self-employment bank account or self-employment expenditure happening in your property bank account, which needs to be rectified and picked up in another area.
Again, it comes down to best practice. Keep things clear with separate accounts so you have clarity in what you're maintaining and keeping.
Like everything, seek professional advice and guidance from an accountant or bookkeeper if you need additional clarity.
Property income brings even more complications. For example, you may rent property out and have agent fees to deal with because you're using someone else to help manage the rental. So you will have deductions.
For example, you're renting a property out for £1,000 a month, but there may be a managing agent fee for £100 or £200 a month, which you need to record.
Your gross income isn't going to be £750. It needs to be £1,000, but you also need to record the expenditure.
Then you're thinking about any debts you may have, such as mortgage interest. Mortgage interest is not an expense. It's a charge. It's a separate calculation that appears on your tax return.
It varies depending on your level of other taxable income, so it creates additional complication.
If you're owning a property, there is also the grey area of whether something is a repair or a property improvement.
Am I repairing and replacing the windows? Or am I doing something fundamentally new to it? There is a difference. Certain expenditure that you may deem a repair isn't actually tax deductible. So again, it creates complications, and you want to make sure you get that right.
Someone else may be managing the bookkeeping for your little rental property. For example, if you're in a property between three different people, maybe someone's nominated to maintain all the records.
For your obligations under MTD, you need to have sight of those records and report those on your own personal quarterly update.
Property is one of the more complicated elements of Making Tax Digital, so it's important to get that right.
I've talked about the thresholds, gross income streams and whether you're self-employed, employed or have property. So how will you really know whether you come into MTD?
For starters, complete your tax return. If you completed your 2024 to 2025 tax return and filed it by 31 January 2026, you should have had a letter already and you know what your income is.
If you're not coming in from April this year, but you're not quite sure where you'll be for next April, the sooner you get your tax return prepared and submitted, the sooner you'll know exactly when and if you're coming in.
By submitting that tax return, HMRC will review it digitally and automatically consider whether your qualifying income comes into play, and therefore confirm whether you're joining by letter.
But again, even though you can do this mechanical approach, do not delay. Do not just wait for the letter. If your tax return, accountant or bookkeeper says your gross income is of a certain value, please start getting better bookkeeping records and being more digitised.
There are some people who may be exempt from MTD. For example, you may be digitally excluded on religious grounds. There are situations where you can be excluded, but they are not automatic. You need to apply for this.
This is something where it's best either to speak to HMRC directly, and I'll be honest, the HMRC telephone helplines will be very busy because it's an extremely busy time of year and a lot of people are entering MTD.
But also, when you consider the need for a digital exemption, it's so important to get it right and not just assume it will happen. Do not assume. If you need help and guidance, speak to an accountant or bookkeeper.
Let's start going through the process. I'm having a quick look at the questions.
There's a question here: "How do we sign up, as I have looked at my HMRC Self Assessment account and I can't find the page to sign up?"
This is an important factor. It's not on your Self Assessment page.
The best thing to do is go to Google and search "sign up for Making Tax Digital HMRC", and there will be a sign-up page. If you're working with an accountant or bookkeeper, please work with them because they need to make sure you're going through the right process with your agent services account.
A question here from Helen. "I've signed up for MTD. I have now started using Xero. My tax year ends on 31 March, but I can't find how to change that on MTD. Any ideas how I do that?"
That should be within your software. HMRC will assume everyone entering Making Tax Digital will have a 5 April year end.
The place where you tell HMRC that it's not 5 April but 31 March is within your software.
If you are using Xero and it's not straightforward, you're going to have to speak to support. I appreciate they don't have telephone support, so you may have to go through some triage.
Within Sage, it's nice and easy. A few clicks of the buttons and you can select which period end it is.
Some people think: "I've got these quarterly reports. I've got to report and share information with HMRC on a regular basis." Some people think it's five tax returns.
That's a total myth. That's not the situation at all.
The situation for Making Tax Digital is, in pure crystal clarity, one, maintaining digital records, income and expenditure. Do it as you go.
Then once a quarter, submit a little quarterly update, basically a summary of your income and expenditure. This isn't a full tax return. It does have to be complete for the detail, but it's almost like a digital handshake with HMRC to validate that you're maintaining digital records.
At the end of the year, you do all the usual things you do. You do the adjustments, reliefs, allowances, capital allowances, adjust for personal deductions and submit your tax return.
For those who don't work with an accountant or bookkeeper, at the moment you go onto the HMRC portal, fill in your own tax return and submit it on the HMRC site.
That will no longer be available. You can no longer file your tax return via HMRC. You now need to use software.
From Sage's point of view, you can do your digital bookkeeping, your quarterly updates and your tax return all within the same application. You don't have to go anywhere else. It's all connected and joined up, so it makes your life a little bit easier.
Here's a question from an anonymous individual: "Even though MTD does not apply to limited companies, would it be to my benefit to listen to this information?"
Yes, because you'll see the benefits of maintaining your records digitally.
If you're a small limited company, you're still collecting information towards the end of one year, and you're creating friction and inefficiency for your own tax return.
Also, potentially, at some point in the near future, because you are a director and shareholder of your limited company, you will have to manage your tax return via software and not online.
There's no determined date for that, but the principle is that HMRC is bringing everything from the old system to a brand new system for reporting.
When you think about what you need to record in your digital records, it has to be the transaction date, the date on which a transaction happened. You need to record the value. Was it £5, £10 or £1,000?
You also need to categorise that transaction through the predetermined HMRC categories.
If you've ever looked at a tax return, you know that you've got category items in terms of income and the various expense headers. That's what needs to be recorded as well.
It's not about rekeying every transaction. It's about making sure you have the right feed of information and collating that information.
You don't have to maintain a copy, receipt or photograph of the receipt. That hasn't changed. It's about maintaining the records appropriately.
You need to record your business or property source of income, and you still need to maintain evidence to support the transaction.
If you imagine when you're delivering a tax return, you still have your paper records in the background. This is no different.
Though your records will be digital, you still need to make sure you've got a copy of bank statements digitally or accessible.
If you've made a payment for an expense and you've got receipts, you still need to keep those receipts for six years.
However, your life is easier if you're using the right software because you can take a picture of the receipt, and that will store against the transaction, mitigating situations where you lose the data. Six years is a very long time.
Let's think about the quarterly updates. As I was saying, you're not submitting four full tax returns a year plus a tax return. No. It's literally a quarterly update.
The quarterly update is a summary of your income and expenditure, basically a summary for the quarter. It'll just be sales and the various expense items, and you then file this through compatible software.
This gives HMRC more regular information, but in return, they'll provide a tax estimate. So there should be less of a surprise in terms of the tax liability going forward.
This doesn't replace the annual tax return. The quarterly update is like a digital handshake and an awareness of what your business performance has been. At the same time, you get a tax estimate back.
What does need to be submitted and when? When you think about the four quarters, they're nice and straightforward: April to July, July to October, October to January, and January to April.
Those quarters are broken down and reported. They then get collated at the end of the year, which means you have to report information on a regular basis.
The key thing is to avoid missing the deadlines. We're trying to mitigate urgency, rushing and bringing information together at the last minute. Fundamentally, this is going to be a rhythm of work going forward.
There's a good question here: "Can we amend the summary later if we realise we missed something that's incorrect?"
That's the magic of it. The updates are cumulative. Quarter one will be three months. Quarter two will be six months. Quarter three will be nine months. Quarter four will be 12 months.
HMRC expects mistakes will happen. HMRC expects new information will come into play. If something gets missed, you just put it into the next quarter, nice and easy. That's all that's required.
The key theme is that you need to make sure you file something every quarter on time to mitigate any penalty points.
We're in a period in year one where there are no penalty points. You basically submit as you go, but please get into the right habit of submitting by 7 August, 7 November, 7 February and 7 May. It's about maintaining that regular rhythm of work.
Let's think about what the year end still looks like.
When you think about the year-end process, it's collating all the information together in your digital record. If you're using the right software, it's going to be an easy lift because it's all in one place.
You then make adjustments for other taxable income. You may have some employee income, dividends received, interest or capital gains.
You may also make adjustments in terms of reliefs. You may have some use of home as office. You may have some capital allowances on a van or fixed asset you've acquired.
You then finalise your property business income. Even though you're having rent received and various expenditure, things like mortgage interest are dealt with in the year end, plus any of the reliefs.
Then you finalise what the tax calculation is and make that final declaration. That's when you formalise what everything is going to look like at the end of the year.
Let's look at what MTD does not change.
It doesn't create a new tax. It's the same taxes you've got at the moment. You're still paying payments on account every January and July, and you're paying any balance of your income tax every January. Nothing is changing there.
It does not remove the annual tax return. What it does mean is the tax return is now part of the software you're using.
It does not mean that software is going to replace professional judgement. The software is there to help you record income and expenditure. Some software is cleverer than others, with auto-categorisation and help identifying anomalies, corrections or duplications.
It does not mean that you're paying tax four times a year. It also does not remove the need for proper records.
It also doesn't send every transaction to HMRC. It's literally just the summary totals.
Here's another question: "Is the first quarter MTD due this July?" No. The first quarter will be from April to the end of July. You're either under calendar reporting or standard reporting.
Standard reporting is when your tax year is 5 April. So the first quarter end will be the quarter ended 5 July, and that will be due on 7 August.
If you are on calendar reporting dates, so you have a 31 March year end rather than a 5 April year end, your first quarter will be April, May and June, ending 30 June. Your quarterly submission is due by 7 August this year.
Hopefully, that answers your question.
What does the software need to do? Clearly, it needs to have a source of truth. It needs to maintain a digital record.
In a perfect world, you have a bank account and the software connects to the bank account, brings that data in and helps with the transactions.
You don't need to have bank information. You can still manually record transactions if you've just got a handful of transactions, so you need to be able to do that manual transaction with journals.
You need to be able to review the detail and categorise the transactions accordingly. You need to be able to produce and submit that quarterly update to HMRC.
Ideally, it does the tax return within the software as well, so you can finalise everything all in one place and not have to step in from Excel spreadsheets, other records or submit separately elsewhere.
So yes, the first quarter due date is 7 August this year, in less than one month's time.
Here's the question from Anita: "If a side hustle is small and you don't use an accountant, may we miss something even doing allowance? Do HMRC correct this?"
It comes down to the size value of the side hustle. For example, if your side hustle is below £50,000 for last year, or if your side hustle is £30,000 this year, it comes down to the total value of the sales.
That's why I went back to the previous slide, where you had the thresholds of £50,000, £30,000 and £20,000 for 2026, 2027 and 2028. It is determined by the sales value.
Even if it may be a side hustle, if it's a side hustle generating £40,000 of gross income, you'll be coming into MTD from April 2027.
Let's think about the three ways records can be maintained.
Clearly, you've got paper records. You may be using a diary or a manual schedule. They're relatively easy to use, but the problem is you can't search quickly for what transaction happened when and how.
With manual transactions, mistakes will happen. You will get a number wrong. You may add up the columns incorrectly. You need to get that calculator out, and it gives little visibility in terms of business performance going forward.
You may be using spreadsheets, Google Sheets or Excel. They may be familiar and flexible. You can literally do anything you like. But again, they may contain errors. They may not add up the columns correctly. You may not have all the information in one place.
Fundamentally, how are you going to submit that information from your Excel spreadsheet to your MTD software? You're going to have to do some soft linkage, and you can't copy and paste. It creates an extra level of complexity, and therefore you're reliant on other manual steps where errors may creep in.
This is where the value of bookkeeping tools comes into place. You can manually rekey information, or you can connect the software to your bank account, allowing data to flow through and some automated transaction recording.
You can also use software, if you've got a mobile device or an email coming through, to take the receipt or invoice, scan the details and store it against the transaction.
Within the product, it will deal with the MTD submissions for you. It'll keep everything more up to date, give you visibility in terms of business performance, provide profit and loss reports, and support the overall MTD submissions going forward.
Clearly, there are efficiencies, time savings and visibility. If you're working with your accountant or bookkeeper, you also have the ability to collaborate with them and share information in real time.
The problems spreadsheets bring are version control, numbers being copied and pasted across, and mistakes in formulas.
This is why MTD has come into play. When HMRC analyses where errors are made, errors are made in manual records as well as Excel spreadsheets. They consume time, and that's where errors creep in.
You may also have receipts that don't agree to the numbers put together, and it can be difficult to identify the split between personal and business expenditure.
If you've got something like a telephone, what's the percentage of personal and business use? In software, it does that for you much more easily.
If you're working with an adviser, you've got a to and fro of information. It makes things clunky.
So when you think about the digital approach, the connected approach, you can have the bank feed, software, review and MTD submission all in one place.
With manual records, you may have your bank statement. You may be rekeying or dropping a CSV file into an Excel spreadsheet. There will be some manual copying and pasting. You'll still need some sort of software to help bridge the gap and bring the data together. You'll still have to review it and still have a submission.
There are extra steps and other areas where things can go wrong.
What does modern software bring to you these days? This is where MTD has brought a huge amount of information to make life easier.
You'll have bank feeds, meaning the ability to bring information in easily. You may have receipt capture, so with your mobile device and your software, you can take a picture of a receipt. It'll read the details automatically, capture it and put it into the software for you.
It'll automatically suggest the categories for you. For example, it will know whether you've been to a fuel station. That's petrol, isn't it? It may know what a bank charge is and put that to the right elements for you.
By the nature of running a business, you'll have direct debits and recurring transactions, and that categorisation will be memorised and therefore made automatic month in, month out.
When you're doing business, you want more professional invoices. Within the software, you can create an invoice with your goods and services and email it to your customer with payment links on it, so they can pay you instantaneously.
From the software Sage produces, not only can you send an invoice with a payment link on it, you can also do tap to pay.
For example, you're a hairdresser. You put your £20 into your Sage Sole Trader app, take your mobile phone, tap it to your customer and get paid instantaneously.
These are the benefits of using software.
One of the key benefits, clearly, if you're working with an accountant or bookkeeper, is that you can share the information in real time with them. So if you've got a query or want guidance or advice, whether around taxation or business planning, they'll be able to support you.
Let's assume you're a landlord. Think about the simple workflow when it comes to software. It will help you support where your tenant is paying you, or keep track of rent you've not received.
Hopefully, you're keeping a separate bank account. Life is so much easier if your rental income is in a separate bank account.
Then you bring the bank feed in, so it's auto-categorised. Rent is captured. It's split out.
If you've got costs, whether you've been to B&Q, made a repair or captured your mileage, you can keep all the details in one place.
You can have your accountant or bookkeeper support the bookkeeping reviews, and ultimately perform those quarterly updates to HMRC as well as the tax return.
Even for a simple landlord, when you have expense items, agent fees, insurance, repairs or service charges, you can keep everything in one place.
You can also set reminders. We don't want to miss getting your gas certificate or insurance renewed. I've heard those horrible war stories where, because the gas certificate had not been renewed, there had been a fire and the insurance hadn't paid out.
If you're using the right software, it'll help to have those recurring items going through.
A question here for Rebecca: "You mentioned mortgage interest being annual, not monthly. So do we not need to work out the monthly amount of mortgage interest as an expense between April and July to submit in August?"
No. Mortgage interest is not an expense of your income and expenditure on your rental property income.
If you go to your tax return at the end of the year, you have an item called charges, and interest is a charge against property. That is something you can do at the end of the year because it does not affect your profit and loss.
If you're a higher-rate taxpayer, you cannot claim all the interest on your mortgage, and this is why it's so important to have the right advice and guidance.
Let's look at sole traders. Again, look at the flow of information. You raise an invoice, preferably within software, but you could do it manually somewhere else.
The income comes into your bank statement. Your basic transactions are in your software. You can use your software to capture a receipt or an invoice to bring it into play.
You categorise the transactions, provide that quarterly information to HMRC and then finalise it at the end of the year.
When you think about it, all those processes that you consolidate and do at the end of the year will be much easier if you're doing them throughout the year as well.
Why are better records more useful than just a three-year tax return?
For example, you start to understand who owes you what money. You understand your cash flow better. You're seeing income and costs much more easily.
It's not going to be a surprise 12 or 14 months after you started trading. You're less likely to miss expenditure.
Keeping records digitally will save you tax because you'll be capturing information and expenditure as you're going along.
You're also able to plan ahead in terms of taxation, so there should be fewer surprises and you can put money to one side, make better decisions faster.
There will be less paperwork, less of a rush and better conversations with your adviser, which is your accountant.
Clearly, it's all about getting ready. Where are you today?
If your records are already super and using software, you have a bank account connected and your accountant has access, you are in the best position. You are effectively MTD-ready. It's all about making sure you've got the right software.
But you may just be getting there. Some records may be digitised. You may be Excel-based or Google Sheets-based. Your records may not be up to date, and you may not have a plan for getting data from your spreadsheet to your software.
So you're sort of there, but you need to get a wriggle on in the next couple of weeks to get MTD-ready.
If your records are still paper-based, if you have a shoebox of expenditure, no separate bank account and you're constantly missing receipts, you definitely need to make a start.
You need to think about what software to use and maybe collating and working with your accountant or bookkeeper.
The seven actions to take now are:
Number one, confirm whether you're in MTD or not. Make that decision. Are you in or out?
Review all your self-employed income as well as your property income.
Understand how you create information, bring it to life and bring it together.
Speak to your accountant or bookkeeper if you have one. They will give you the advice, guidance and support you need.
With them, decide who's going to do what work, who will record information, who will collate it and who will file those quarterly updates.
Together, choose which type of software is best suited for your needs.
More importantly, try to encourage that separation of personal and business transactions with a separate bank account. I guarantee you, life will be so much easier if you have a bank account for your business and a bank account for your personal life.
You do not want to be coding up your gym membership and Netflix subscriptions in your business transactions. There are fewer transactions to code up.
More importantly, start as quickly as possible in terms of coding transactions regularly.
Here are the questions to ask your accountant or bookkeeper to get the best from them.
Everything from confirming if you're in scope, to thinking about who's going to confirm and do submissions, validating what it's going to cost you, what the service level and fees are, what additional information may be required and how you can work with them more easily.
I'm not going to read out all those questions. Take a picture, screen grab it. These are the types of questions you need to ask your accountant or bookkeeper.
If you're thinking about what software to use, make sure you ask the right questions of the software provider.
For starters, does it support MTD? Is it going to do everything you need? Is it going to support sole traders and landlords in one product?
Can it connect to your bank account and bring all that data into one place?
Can you use your mobile device to take a picture, bring an invoice in by email and scan the details so you don't have to rekey it?
Can your accountant or bookkeeper have instant live access?
Is support available? We've discussed Xero before. You'll be reliant on chat support for Xero. With Sage, you've got telephone support.
What does it cost? Is it going to be free, or is it paid?
Here's a hint: Sage is providing free MTD software for the simplest of business owners. You can raise five invoices a month and hook up your bank feed. For the paid-for items, you have more features and functionality.
Also, the small business you have today may be larger in the future. So think about tools that will grow with you and your business complexity.
More importantly, does the software deal with the tax return at the end of the year? You don't want another piece of software.
From Sage's point of view, do not worry. We have the tax return software built within the tool itself.
Little and often beats one large exercise. That is the overall message of MTD.
It's about regular touch points. Get your data in. Raise your invoices from the software. Every now and then, go in and do a bit of categorisation.
Don't leave it to the end of the quarter or the end of the month. Spend 10 minutes on Sunday evening to see where you are and get the job done. You'll suddenly realise how much easier it is.
What is your focus over the next 30 days? Again, 7 August 2026 is the deadline for the first quarterly submission.
Number one, confirm whether you're in MTD. Should you be in it?
Speak to your accountant or bookkeeper. They'll validate it and give you confidence in what to do next.
Review what your software needs are and what bank accounts you require.
More importantly, start that digital recordkeeping. Make a start on it.
Getting ready starts with better recordkeeping. End of story.
It's about getting everything in one place, giving you confidence in what you've got and keeping it digital. It's not just about racing to that first quarterly deadline.
What we've experienced with small business owners, accountants and bookkeepers who have been partner testing with us for over 12 months is that they're definitely seeing the benefits coming into play.
A question: "Can we get the categories from HMRC?"
Yes, you can. They're all in the software. It does it automatically for you. That's why it's so important to start with it.
So the five things you need to remember from this session are:
MTD changes the reporting process, not the underlying tax. It's the way you record information, not how tax is calculated.
Eligibility is based on your gross qualifying income. Self-employment and rental income, the total sales and rental value, ignoring employment, pensions and dividends. Get that number right.
Digital recordkeeping is the heart of MTD. You will see the value from it.
These quarterly updates are like a light touch with HMRC. They're not the detailed transactions. You don't have to do all the bells and whistles. You don't have to do your accruals, prepayments and loss relief. It's like a little additional handshake.
Once you see the software and see what's involved, you'll have that light bulb moment of how much easier it's going to be and the fact that you don't have the friction that exists now.
Number five, speak to your friendly accountant or bookkeeper to help support you.
Where do you start? As I mentioned, Sage is MTD-ready. We have a whole range of MTD solutions designed for accountants, bookkeepers and small business owners.
Some are more complex than others, depending on more complex needs. But the key thing is that Sage Sole Trader will support you whether you're a sole trader or landlord, and we have a free solution as well as a paid-for solution.
Just click on the link in the chat. You can get 90% off for six months for the bigger package, but Sage Sole Trader is free of charge. There is no blocker there. Free. You don't even need it, and it's free forever.
In the free tier, you get five sales invoices in a month, can hook up a bank feed, store your invoices, do your quarterly updates and do your tax return.
Clearly, if you're raising more than five sales invoices a month, upgrade to the paid-for package if you want more reporting and functionality.
The key thing is: make a start, get ready, understand what you need to do and speak to an accountant or bookkeeper if you need more help.
Hopefully, you've found the last 50 minutes useful and insightful, and I've answered all your questions.
Enjoy your afternoon. Thank you very much.
Amy: Thank you so much, Chris. That was amazing. You've definitely answered all of our questions, which is great.
Thank you to everyone who has joined us on today's webinar. As I said, I'll share the recording and further resources in a follow-up email this afternoon.
Thank you again, Chris, for sharing all your insight and expertise with us. I hope everyone has a lovely rest of their day.
Chris: Likewise. Have a good day. Thank you.
Amy: Thanks.
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