Making Tax Digital for Income Tax represents one of the most significant changes to the UK tax system for self-employed individuals and landlords in recent years. From April 2026, many taxpayers will need to adopt a new way of keeping records and reporting their income to HMRC using compatible software.

For those currently relying on annual Self Assessment, this shift introduces more frequent reporting and a stronger focus on digital record keeping. While the changes are designed to improve accuracy and streamline tax administration, they also require careful preparation.

At Sherwin Currid, we work with small businesses, freelancers, sole traders and landlords, many of whom will be directly affected by these changes. This guide explains what Making Tax Digital for Income Tax involves, who needs to comply, and how to prepare in a practical and manageable way.

• Making Tax Digital for Income Tax becomes mandatory from April 2026 for individuals above the income threshold
• You will need to keep digital records and submit quarterly updates using compatible software
• Sole traders and landlords are the most likely to be affected by the changes
• Early preparation makes the transition smoother and reduces the risk of errors
• Ongoing support can help ensure compliance and simplify the reporting process

Did you know? Many taxpayers will move from one annual submission to multiple updates each year under Making Tax Digital.

Making Tax Digital for Income Tax is a government initiative that requires individuals with income from self-employment or property to keep digital records and submit updates to HMRC using compatible software.

Under the new system, you will need to:

• Keep digital records of your income and expenses
• Submit updates to HMRC every quarter
• Complete a final submission after the end of the tax year

This replaces elements of the traditional Self Assessment process, where information is typically submitted once per year.

• Digital record keeping: Paper records or spreadsheets alone will not meet the requirements unless they are linked to compatible software
• Regular reporting: Income and expenses are reported during the year rather than annually
• Software-based submissions: Updates must be sent through HMRC-recognised software

The aim is to reduce errors and give taxpayers a clearer view of their tax position throughout the year.

The introduction of Making Tax Digital for Income Tax will be phased.

Key dates to be aware of

Qualifying income refers to your total gross income from:

• Self-employment
• Property

This is calculated before expenses are deducted.

Even if you are not required to comply from April 2026, it is sensible to begin preparing early. Moving to digital systems and understanding the reporting process in advance will make the transition significantly smoother.

Making Tax Digital for Income Tax applies to individuals who are already within Self Assessment and meet the qualifying income thresholds.

• A sole trader running your own business
• A landlord receiving rental income
• Someone with both self-employment and property income

• Qualifying income is based on total income before expenses
• Multiple income streams are combined when assessing thresholds
• Other income sources such as employment income or dividends are not included in this calculation

Some individuals may fall below the thresholds or qualify for exemptions, but the direction of travel is clear. Digital reporting is becoming the standard, so early preparation is advisable even if you are not mandated straight away.

MTD for Sole traders and MTD for landlords will experience the most direct impact from Making Tax Digital for Income Tax.

• You will need to maintain digital records of all business transactions
• Income and expenses must be categorised accurately
• Quarterly submissions will become part of your routine

• Rental income and allowable expenses must be recorded digitally
• Each property or portfolio needs to be managed carefully
• Records should be kept up to date throughout the year

If you have both self-employment and property income, you will need to ensure that:

• Records are clearly separated
• Each income source is tracked accurately
• Reporting is consistent across all activities

This represents a shift from an annual process to ongoing compliance, which is why having the right systems in place is essential.

One of the most significant changes under Making Tax Digital for Income Tax is the introduction of quarterly updates.

Quarterly updates are summaries of your income and expenses submitted to HMRC throughout the year.

You will report four times during the tax year, covering:

• Quarter 1: April to June
• Quarter 2: July to September
• Quarter 3: October to December
• Quarter 4: January to March

Each update will include:

• Total income for the period
• Total expenses for the period
• Categorised financial data

In addition to quarterly updates, you will still need to:

• Finalise your figures after the tax year ends
• Submit a final declaration to confirm your tax position

Quarterly reporting does not automatically mean that tax is paid quarterly. It relates to reporting obligations rather than payment schedules.

To comply with Making Tax Digital for Income Tax, you must use software that is compatible with HMRC’s systems.

MTD-compatible software allows you to:

• Keep digital records
• Submit quarterly updates
• Send final declarations to HMRC

• Secure digital record keeping
• Ability to categorise income and expenses
• Integration with HMRC systems
• User-friendly interface

Choosing the right software early can:

• Simplify compliance
• Reduce the risk of errors
• Save time on administration

At Sherwin Currid, we support clients in selecting and implementing software that aligns with their business needs and reporting requirements.

Preparation is key to a smooth transition.

• Review how you currently keep records
• Move away from paper-based systems where necessary
• Ensure income and expenses are recorded consistently
• Choose suitable MTD-compatible software
• Familiarise yourself with quarterly reporting deadlines

• Keep records up to date rather than leaving them until year end
• Separate personal and business finances clearly
• Regularly review your financial data for accuracy

• Reduced stress when the rules come into effect
• Greater confidence in your reporting
• Improved visibility of your financial position

Early action allows you to adapt gradually rather than making rushed changes later.

Many people ask whether they need an accountant to comply with Making Tax Digital for Income Tax.

You may benefit from working with an accountant if:

• You have more than one income source
• You are unsure whether you meet the thresholds
• You are not confident using accounting software
• You want to ensure full compliance with HMRC requirements

An accountant can:

• Help you choose and set up the right software
• Ensure your records meet digital requirements
• Manage quarterly submissions on your behalf
• Provide guidance throughout the year

Rather than reacting at the end of the tax year, Making Tax Digital encourages a more proactive approach to managing your finances. Professional support can make this process more efficient and less time-consuming.

If you are searching for a Making Tax Digital accountant in the UK, it is important to choose a firm that understands both the technical requirements and your individual circumstances.

• Clear explanations of the rules
• Help understanding whether they are affected
• Support with software setup
• Ongoing assistance with reporting

• Experience working with sole traders and landlords
• Strong understanding of Making Tax Digital requirements
• Ability to provide practical, ongoing support
• Clear and responsive communication

Choosing the right accountant can make a significant difference to how smoothly you transition to the new system.

Support with Making Tax Digital can take several forms, depending on your needs.

• Initial assessment of your readiness
• Setup and configuration of software
• Ongoing support with quarterly updates
• Year-end submission assistance
• General compliance guidance

Making Tax Digital is not a one-off task. It requires consistent record keeping and regular reporting throughout the year. Having access to reliable support can help you stay on track and avoid issues.

A system that requires digital record keeping and regular reporting of income and expenses to HMRC using compatible software.

April 2026 for individuals with qualifying income over £50,000, with further expansion from April 2027.

Sole traders and landlords with qualifying income above the threshold.

Total gross income from self-employment and property before expenses.

Digital records of income and expenses, maintained throughout the year.

Software that is compatible with HMRC’s Making Tax Digital system.

Quarterly updates, plus a final submission after the end of the tax year.

Start using digital systems, organise your records, and understand your reporting obligations.

At Sherwin Currid, we provide practical support to help you navigate Making Tax Digital for Income Tax with confidence.

• Supporting the adoption of suitable software
• Assisting with the preparation and filing of returns
• Helping ensure ongoing compliance with HMRC requirements

We work closely with small businesses, freelancers, sole traders and landlords to provide tailored advice and ongoing support.

Our focus is on making the transition to Making Tax Digital as straightforward and manageable as possible.

Making Tax Digital for Income Tax is changing how individuals report their income and manage their tax obligations. With the first phase starting in April 2026, now is the time to understand what is required and begin preparing.

By putting the right systems in place and developing good record-keeping habits, you can approach these changes with confidence. Whether you manage the process yourself or seek professional support, early preparation will make a significant difference.

At the same time the regulatory and reporting environment for sole traders is becoming more complex and costly, particularly in light of the forthcoming Making Tax Digital for Income Tax Self Assessment (MTD IT) regime.

In this article we explain why many contractors should seriously consider incorporation, we set out the implications of the new MTD changes for sole traders, and we describe how Sherwin Currid supports contractors in forming and running limited companies.

• Forming a limited company can improve tax efficiency and business credibility for contractors.
• Sole traders will face higher costs and admin from MTD IT starting April 2026.
• MTD IT requires quarterly digital submissions using approved software.
• Sherwin Currid helps contractors compare structures and manage incorporation.
• The right accountant can save time, reduce stress and maximise take-home pay.

Contractors provide their services to clients for fixed terms, projects or on a rolling basis. Many begin as sole traders because of the relative simplicity—limited set up, fewer formalities, and the ability to invoice and manage expenses in a straightforward manner. However, as business grows, profits rise and client expectations shift, the limited company structure becomes increasingly relevant.

At Sherwin Currid we have extensive experience advising self-employed professionals, contractors and freelancers. Having expert support can help contractor clients carve out net income, manage risk and ensure they meet compliance obligations without disruption. The key question contractors should ask is: “Is remaining a sole trader still the best structure for me, or would a limited company deliver measurable benefits?”

Forming a limited company means that your business becomes a separate legal entity, registered at Companies House. You become a director and/or shareholder, and the company has its own set of legal and tax obligations. At Sherwin Currid we advise contractors from the point of company formation through to ongoing compliance.

• The company enters into contracts in its own name, opens a bank account, and owns assets and liabilities.
• As a director and shareholder you can be paid a salary and receive dividends.
• The company must file annual accounts and a corporation tax return.
• You have responsibilities as a director: maintaining statutory registers, filing a Confirmation Statement, and ensuring compliance with Companies Act duties.

Compared to sole trader status, a limited company offers limited liability protection (subject to director duties), formal separation of personal and business finances, and potentially enhanced credibility to clients. That said, incorporation also brings costs—both initial and ongoing—which is why it is critical to decide with professional advice whether it is right for your individual circumstances.

One of the most compelling reasons contractors opt to incorporate is the potential tax efficiency. Below is a comparative explanation of how sole trader profits are taxed versus a limited company, and why the company structure may make sense when profits reach a certain level.

As a sole trader:

• All business profits are taxed as personal income via Self Assessment.
• Income tax rates apply according to personal tax bands.
• Class 2 and Class 4 National Insurance contributions apply (depending on profit level).

Because the business and personal tax positions are blended, there may be fewer opportunities to optimise.

In a limited company:

• Profits are subject to Corporation Tax first.
• After tax the company can distribute dividends to the shareholder(s).
• The director may take a salary (generally set at the National Insurance threshold or personal allowance) and dividends thereafter.
• Retained profits can remain in the company for reinvestment or pension contributions.

Thus when profits rise sufficiently, there can be tax efficiency gains compared with sole trader status.

Forming a company may become worthwhile when:

• The business profits (after expenses) are at a level where the additional costs of company compliance are outweighed by tax/NI savings.
• The contractor wants to retain earnings in the business for future investment or pension-planning purposes.
• The contractor wishes to present a more formal trading structure to clients (which may increase contract opportunities).

At Sherwin Currid we assess each contractor’s net profit, projected growth and contract pattern to determine whether incorporation is the appropriate structure and to manage the transition smoothly.

For many contractors operating as sole traders, one of the major structural changes on the horizon is the introduction of the Making Tax Digital for Income Tax Self Assessment (MTD IT) regime from April 2026 onward.

The key issue is that this introduces increased reporting frequency, digital record-keeping requirements, and therefore higher administrative costs. These factors affect the simplicity advantage of sole trading and make incorporation comparatively more attractive.

The rollout is phased as follows:

Once in scope a sole trader or landlord must:

• Keep digital records of income and expenses digitally.
• Use software (or spreadsheets with bridging software) that is certified as “functional compatible”.
• Submit quarterly digital updates to HMRC for each income source (trades, property) and then complete a final digital declaration for the tax year.
• The current quarterly deadlines for those in scope follow: 7 August, 7 November, 7 February, 7 May, then final return by 31 January in the following year.

For contractors running as sole traders the combination of rising profits, increasing regulatory burden via MTD IT, and higher ongoing compliance costs means the advantage gap between sole trading and incorporation is narrowing. As a result, incorporation may become a more cost-effective structure even at lower profit levels than previously.

Sherwin Currid helps contractors model this reality, estimate the additional cost of staying sole trader, and work through a cost-benefit review of incorporation.

Deciding whether to incorporate is not solely a matter of tax. For contractors we at Sherwin Currid look at several interacting factors.

If net profits (after expenses) are increasing and you anticipate retaining earnings in the business rather than drawing everything, a company structure starts to deliver. If profits remain modest, the extra company costs may outweigh the benefits.

Some end clients prefer contractors via limited companies rather than as sole traders for reasons of status, perceived risk, insurance or financial mechanics. Operating through a company may open more contract doors.

If your goal is to invest in equipment, hire staff, or expand operations, incorporation can provide a solid framework for growth. It allows you to retain profits within the business, plan more effectively for pensions, and build towards a future exit or sale.

Higher risk contracts, such as those in engineering or construction, may warrant the formal structure of a limited company which can reassure clients and insurers.

Do you already maintain proper bookkeeping, use cloud accounting software, and are comfortable with the digital demands of a limited company? If not, a transition period is needed.

At Sherwin Currid we conduct a “sole trader vs limited company” review so contractors can make an informed choice and we guide the transition if you choose incorporation.

At Sherwin Currid we specialise in supporting contractors and small businesses with structures that match their growth ambitions. Our services include:

• Company formation: registering your limited company, advising on director/shareholder structures, corporate governance, and transition from sole trader.
• Ongoing compliance: annual accounts, corporation tax computations and filings, payroll for directors, dividend planning, Companies House filings, VAT and other regulatory obligations.
• Contractor-specific advisory: IR35 status guidance, contract review, tax and cash flow planning for contractors, cloud bookkeeping and management accounts.
• Fixed-fee, transparent pricing and local offices across Surrey, Hampshire, Sussex, Kent and London so contractors always deal with a dedicated accountant they know.

When you choose Sherwin Currid we act as your partner: we review your current structure, project future profits and compliance costs, compare sole trader versus limited company, and if incorporation is the right step we manage the transition and ongoing requirements so you focus on delivering your contracts.

While incorporation has many benefits, contractors must be aware of the potential drawbacks and ensure they are comfortable with the structure or engage appropriate support. Key issues include:

• Additional cost: bookkeeping, company filings, payroll for any director salary and dividend administration.
• Director responsibilities: maintaining statutory registers, ensuring accurate accounts and acting in the company’s best interests.
• Contract status issues: incorporation does not negate IR35 or other contractor-status risks. You must still ensure your contracts and working arrangements are structured correctly.
• Timing and horizon: if profits remain low, or you anticipate winding down the contractor business quickly, incorporation may not be cost-effective.
• Complexity of transition: moving from sole trader to company involves tax planning (there may be overlap profits, pension impact), and you should review your situation with a specialist.

At Sherwin Currid we guide you through these considerations with a clear checklist, highlight all costs and obligations, and help you decide whether staying as a sole trader makes more sense—or whether incorporation is the better pathway.

Incorporation offers contractors structure, tax-planning opportunities and credibility. However it is not the right choice for every contractor. The changing regulatory landscape with the introduction of MTD IT from April 2026 onward means that for many sole trader contractors the cost, burden and risk of remaining a sole trader may rise sharply.

By undertaking a careful review of profit levels, growth ambitions, contract type and compliance cost, you can decide whether forming a limited company is the best move now rather than later. If you are a contractor and want to explore whether you should incorporate, Sherwin Currid is ready to help.

Contact us today for a review of your current structure, a comparison of sole trader versus limited company scenarios, and a clear transition plan if incorporation proves the right choice.

• 6 April 2026 — mandatory for sole traders/landlords with qualifying income over £50,000.
• 6 April 2027 — threshold lowers to over £30,000.
• Quarterly update deadlines once in scope: 7 August, 7 November, 7 February, 7 May, plus final declaration 31 January following the end of the tax year.

• Management accounting provides timely financial insight to support informed business decisions.
• Monthly or quarterly management accounts help SMEs stay in control of cashflow.
• Regular reporting highlights trends in costs, margins and profitability early.
• Management accounts support structured planning for growth and cost management.
• Working closely with an accountant turns financial data into practical action.

Management accounts are internal financial reports prepared regularly throughout the year. They are typically produced monthly or quarterly and are tailored to the needs of the business and its decision makers. Their purpose is to provide insight, not simply to report figures.

Unlike statutory accounts, management accounts are flexible in format and content. They focus on the information that matters most to the business owner or management team, allowing them to assess performance and identify trends as they emerge.

A typical set of management accounts may include:

Management accounts may also include narrative commentary that explains movements in figures and highlights areas requiring attention. This commentary is often where the greatest value lies, as it translates numbers into meaningful insight.

Producing management accounts regularly allows business owners to stay close to the financial performance of their business. Issues such as falling margins, rising overheads or tightening cashflow can be identified early, giving time to respond before they become serious problems.

Management accounting is valuable for a wide range of businesses, but it is particularly beneficial for small and medium sized enterprises. SMEs often have fewer internal resources and rely heavily on external advisers for financial insight and planning support.

At Sherwin Currid, we work with clients across many industries and professions, including:

• Contractors and freelancers
• Construction and engineering professionals
• IT consultants
• Landlords and property investors
• Media and creative professionals
• Professional service providers

These businesses can often face fluctuating income, irregular cashflow and increasing cost pressures. Regular management accounts help bring stability and structure to financial decision making, regardless of sector.

Management accounting is especially useful for businesses that are growing, restructuring or navigating uncertain trading conditions. Having clear, current financial information allows business owners to make decisions based on evidence rather than instinct. It also supports more productive conversations with lenders, investors and advisers.

Cashflow is one of the most critical aspects of any business. Even profitable businesses can fail if they run out of cash. For SMEs, managing cashflow effectively is often the difference between stability and stress.

Common cashflow challenges include:

• Late customer payments
• Large or unexpected expenses
• Seasonal fluctuations in income
• VAT and tax payment cycles
• Rapid growth that outpaces available cash

Management accounts place cashflow at the centre of financial reporting. Rather than focusing solely on profit, they provide visibility over how cash is moving through the business and what the future cash position is likely to be.

A simple cashflow forecast included within management accounts might look like this:

This type of forecasting helps business owners anticipate pressure points and plan accordingly. It may influence decisions such as delaying expenditure, accelerating invoicing or negotiating payment terms with suppliers.

By reviewing cashflow regularly, businesses are better equipped to maintain financial resilience and avoid surprises.

Management accounts are not just about producing reports. Their real value lies in how the information is used. When reviewed properly, management accounts provide insight that supports smarter, more confident decision making.

Key decisions supported by management accounts include:

Understanding true profitability helps ensure pricing reflects both direct and indirect costs.

Tracking expenses over time highlights areas where costs are increasing and where efficiencies can be found.

Management accounts help assess whether the business can afford to hire staff, increase marketing spend or invest in new equipment.

Monitoring debtor and creditor days supports better cashflow control and payment discipline.

Growth brings opportunity, but it also brings risk. Without proper planning, growth can place strain on cashflow, systems and people.

Management accounts play a key role in growth planning by supporting budgeting and forecasting. A budget sets expectations for income and costs, while forecasts are updated regularly to reflect actual performance.

Using management accounts, businesses can:

• Compare actual results against budget
• Update forecasts based on current trends
• Test different scenarios before committing to decisions

Scenario planning is particularly valuable. For example:

• What is the impact of hiring an additional employee?
• How does a price increase affect profitability and demand?
• Can the business support expansion into a new market?

Having reliable financial data allows these questions to be explored in a structured way. This reduces risk and increases confidence when pursuing growth opportunities.

Well structured management accounts reflect how the business actually operates. This may involve reporting by department, project, service line or location, depending on the nature of the business.

Clear reporting supports accountability and focus. It helps business owners see which parts of the business are performing well and which require attention.

Common performance metrics include:

• Gross profit margin
• Net profit margin
• Debtor days
• Overhead ratios
• Cash conversion cycle

These metrics can be reviewed monthly or quarterly to track trends and guide decisions. Over time, this creates a disciplined approach to financial management and performance review.

Reliable management accounts depend on good quality data. Cloud accounting software makes it easier to capture, process and analyse financial information in a timely way.

At Sherwin Currid, we include a FreeAgent subscription as standard within our client packages. We also work with Xero, QuickBooks, Dext and other cloud accounting solutions.

These systems:

• Automate bank feeds and transaction capture
• Reduce manual data entry
• Improve accuracy and consistency
• Enable faster reporting

Using the right systems ensures that management accounts are based on current and complete information, allowing decisions to be made with confidence.

Management accounts are most effective when supported by professional insight. An experienced accountant adds value by helping interpret the numbers and translating them into practical actions.

At Sherwin Currid, we work closely with clients to:

• Agree relevant reports and KPIs
• Provide clear explanations of results
• Highlight trends and risks
• Support planning and forecasting
• Review performance regularly

Whether management accounts are prepared monthly or quarterly, regular review meetings ensure that insight leads to action. This partnership approach allows business owners to focus on running their business while having confidence in their financial decision making.

Setting up management accounts does not need to be complex. A structured approach ensures the right foundations are in place.

Key steps include:

• Ensuring bookkeeping is up to date
• Connecting bank feeds and financial data
• Agreeing reporting format and metrics
• Choosing a reporting frequency
• Scheduling regular review meetings

Once in place, management accounts become an ongoing tool for insight, planning and control.

Management accounting gives SMEs clarity, structure and confidence. By providing regular insight into performance, cashflow and costs, management accounts support better decision making and more sustainable growth.

At Sherwin Currid, we help businesses move beyond year end reporting and use financial information as a strategic tool. Whether you are looking to improve cashflow visibility, plan for growth or gain greater control over your finances, monthly or quarterly management accounts can make a meaningful difference.

If you would like to explore how management accounting could support your business, we would be happy to help. Book your appointment today and speak to one of our advisors.

We would like to extend a very warm welcome to all clients joining us from Pennywise Accounting.

We recognise that moving to a new accountant can feel like a significant step. Please be assured that we are fully committed to making this transition smooth, structured, and straightforward. Having successfully integrated two previous acquisitions, we have developed a clear, client-focused transition process designed to ensure continuity of service and minimal disruption.

At Sherwin Currid, every client is assigned a dedicated accountant who serves as their main point of contact, ensuring all our clients receive a responsive, personal service. Pennywise clients will benefit from this same, personal relationship, with a dedicated accountant who will take the time to understand their affairs and is readily available to assist with queries and ongoing support.

In addition, your dedicated accountant is supported by the wider Sherwin Currid team for when specialist technical input or additional expertise is required. Our approach provides the reassurance of expert professional support while maintaining the simplicity of a single, approachable contact.

We look forward to working closely with you and supporting your accounting, tax, and business advisory needs in the years ahead.

Commenting on the acquisition, Max Sherwin, Director at Sherwin Currid, said:

Sherwin Currid provides a full range of accounting and tax services to businesses, company directors, sole traders, and individual taxpayers.

Our services include:

• Annual accounts preparation
• Personal tax returns and planning
• Corporation tax compliance and planning
• VAT returns and bookkeeping
• Payroll and CIS services
• Management accounts and financial reporting
• Business advisory and strategic planning
• Tax-efficient remuneration planning

With our team of highly experienced accountants and tax advisers, we are equipped to manage complex tax matters alongside routine compliance obligations. Whether advising on corporate structures, tax planning strategies, or day-to-day bookkeeping, we aim to deliver considered and clear advice on which you can rely.

Our clients range from start-ups and growing businesses to established companies and high-net-worth individuals. Regardless of size or sector, our objective remains consistent: to provide expert accounting services combined with proactive, forward-thinking advice.

At Sherwin Currid, we believe your relationship with your accountant extends far beyond preparing annual accounts or filing tax returns.

We prioritise proactive tax planning, helping clients identify opportunities to improve efficiency, manage liabilities and plan confidently for the future. We collaborate with clients throughout the year to ensure they make the right decisions for themselves. Our accountants will also ensure that they have an annual tax planning meeting with each of our clients, helping to plan for the future and ensure tax efficiency.

A key element of our service is unlimited support. We understand that business owners and individuals often require advice at the drop of a hat. Direct access to your dedicated accountant ensures that guidance is available when needed, whether you have a straightforward query or a more complex financial matter.

As a firm of modern, forward-facing accountants, we recognise the importance of efficient, accurate and accessible record keeping.

Our team has extensive experience working with leading cloud accounting software, such as FreeAgent and Xero. As licenced partners with these platforms, we assist clients with:

• Software implementation and migration
• Ongoing bookkeeping and accounting support
• Training for business owners and staff
• System optimisation and integration
• Real-time management reporting

Cloud accounting allows for greater collaboration, improved visibility, and more streamlined processes. That is why we have worked with cloud software from the outset and are proud to partner with a range of firms through whom we can ensure that clients have access to the best software for them.

Whether meeting clients in our local offices or supporting them remotely across the UK, our systems enable a flexible and efficient service.

Each acquisition we undertake is carefully considered and aligned with our long-term vision for Sherwin Currid. Our focus remains on maintaining high standards while delivering an approachable and responsive service.

We understand that trust is fundamental in the relationship between our accountants and clients. By allocating dedicated accountants, providing proactive advice, and ensuring accessible support, we aim to build lasting professional relationships that extend well beyond annual compliance work.

The acquisition of Pennywise Accounting represents an important milestone for Sherwin Currid and allows us to support an even wider range of businesses and individuals with comprehensive accounting and tax services.

To our new clients, we very much look forward to working with you. To our existing clients and professional contacts, thank you for your continued trust and confidence.

As we continue to grow, our focus remains unchanged: delivering expert advice, exceptional service, and building long-term relationships.

• Landlords face growing tax and reporting obligations that require structured financial management
• Clear record keeping and digital systems reduce errors and improve long-term tax planning
• Operating personally or through a limited company depends on income levels and future plans
• Making Tax Digital for Income Tax will change how many landlords report rental income
• Specialist landlord tax services help reduce risk, save time, and improve financial clarity

Most landlords are required to declare rental income through Self Assessment. This applies even where rental profits are modest or where expenses significantly reduce taxable profit. Rental income includes not only monthly rent but also other amounts received from tenants, such as service charges or fees for additional services.

Deadlines and accuracy matter. Late or incorrect submissions can result in penalties and interest. Many landlords underestimate the importance of keeping records up to date throughout the year, which often leads to rushed and stressful tax return preparation.

Allowable expenses can significantly reduce your taxable rental profit, but only if they are claimed correctly. Typical allowable costs include:

• Repairs and maintenance to keep the property in its existing condition
• Letting agent and management fees
• Insurance for buildings and contents
• Utility bills and council tax paid by the landlord
• Professional fees, including accountancy costs

Clear records are essential. HMRC may request evidence to support expense claims, and poor record keeping increases the risk of errors. Digital bookkeeping systems make it easier to track expenses accurately and retain supporting documentation.

When you sell a rental property, Capital Gains Tax may be payable on any increase in value. UK residential property sales must be reported to HMRC and any tax due paid within 60 days of completion. This can catch landlords by surprise if planning has not been done in advance.

Professional advice can help you understand reliefs, exemptions, and timing considerations, ensuring you meet reporting deadlines while minimising unnecessary tax exposure.

Good systems form the foundation of effective tax planning and stress-free compliance.

Where possible, keeping property income and expenses separate from personal finances provides clarity and reduces errors. Many landlords choose to use a dedicated bank account for rental transactions, which makes tracking income and expenses significantly easier.

A simple monthly routine can prevent year-end issues. This typically includes:

• Recording all rental income received
• Logging expenses and attaching receipts
• Reviewing unusual or one-off transactions
• Checking cash flow against upcoming costs

Small, regular actions reduce the risk of missed information and allow potential issues to be identified early.

Understanding profitability on a per-property basis allows better decision-making. Regular reviews help landlords assess whether rent levels remain appropriate, whether costs are increasing, and whether further investment makes financial sense.

Cloud accounting software supports this process by providing real-time financial information and reducing manual administration.

One of the most common questions we receive from landlords concerns structure. There is no single correct answer, but understanding the differences is essential.

Many landlords own property in their personal name. This approach is often simpler and involves fewer administrative requirements.

Advantages include:

• Straightforward setup
• Fewer ongoing compliance obligations
• Simpler tax reporting through Self Assessment

However, rental profits are taxed at personal income tax rates, which can be significant for higher or additional rate taxpayers. As portfolios grow, personal ownership may become less tax efficient.

Some landlords choose to hold properties within a limited company, called a special purpose vehicle.

Potential benefits include:

• Corporation tax on profits rather than income tax
• Greater flexibility over when and how profits are extracted
• Easier reinvestment of retained profits into further property purchases

There are also important considerations:

• Additional administrative responsibilities
• Annual accounts and Companies House filings
• Tax implications when extracting profits as salary or dividends

The decision depends on individual circumstances, including income levels, future investment plans, and financing arrangements. Incorporation may not be suitable for every landlord, particularly where existing properties are already held personally and would trigger tax charges if transferred.

Professional advice allows landlords to compare scenarios and understand the long-term implications before making structural changes.

Making Tax Digital for Income Tax introduces digital record keeping and quarterly reporting to HMRC. Instead of submitting a single annual tax return, affected landlords will need to provide quarterly updates and an end-of-year submission using compatible software.

MTD for Income Tax will be introduced in stages based on qualifying income levels from self employment and property.

This means many landlords who currently file a single annual return will need to adapt their systems and processes in the coming years.

Preparation is key. Waiting until MTD becomes mandatory increases the risk of disruption and errors.

Effective preparation includes:

• Moving to compatible digital bookkeeping software
• Establishing regular record keeping routines
• Understanding quarterly submission requirements

At Sherwin Currid, we support landlords with software selection, setup, and ongoing compliance to ensure the transition is smooth and manageable.

Recent Budgets have reinforced the need for proactive tax planning. Changes to the taxation of property income, savings, and dividends have increased pressure on landlords, particularly those with higher levels of income.

While tax rates and allowances are outside a landlord’s control, planning opportunities remain. Reviewing structure, timing income and expenditure carefully, and ensuring reliefs are fully utilised can make a meaningful difference to overall tax outcomes.

Professional advice helps landlords respond to these changes strategically rather than reactively.

A dedicated landlord tax service provides more than compliance support. It creates structure and clarity.

Key areas of support include:

• Accurate and timely tax filings
• Strategic tax planning tailored to your portfolio
• Support with MTD readiness and digital systems
• Ongoing advice as circumstances change

By outsourcing complexity, landlords gain confidence and free up time to focus on managing and growing their property investments.

Landlord tax does not need to be overwhelming. With the right systems, structure, and professional support, managing property finances becomes clearer and more controlled.

At Sherwin Currid, we work with landlords to simplify compliance, plan effectively, and prepare for future changes such as Making Tax Digital. Whether you are reviewing your current structure or preparing for new reporting requirements, proactive advice makes all the difference.

• Income tax and National Insurance thresholds will remain frozen until 2031, increasing the likelihood of taxpayers moving into higher bands.
• Property income, savings income and dividend income will attract higher tax rates from 2026 and 2027.
• A new limit on the national insurance advantages of salary sacrifice pension contributions will begin in 2029.
• Benefits in kind will be reported through PAYE in real time from 2027 as P11D forms are removed.
• HMRC will strengthen compliance activity and require VAT e invoices from 2029.

The government has confirmed that the freeze on personal income tax thresholds and the National Insurance contributions secondary threshold will be extended from 2028 until 2031. A freeze of this length increases the effective tax burden on many individuals because wages tend to rise over time. As earnings grow while thresholds remain fixed, more people move into higher tax bands. This is often described as a stealth tax because it raises revenue without altering headline tax rates.

The Plan 2 student loan repayment threshold will also be frozen from April 2027 until 2029 to 2030. Graduates with these loans will therefore begin making repayments sooner or at higher levels than they would if thresholds rose with inflation.

• More individuals are expected to become higher rate taxpayers over the coming years.
• Even modest pay increases may result in higher total tax paid.
• Graduates on Plan 2 loans will see earlier or larger repayments.
• The freeze interacts with other changes in this Budget, particularly the increases to dividend tax rates and the higher tax rates on savings and property income.

Property income will be taxed at higher rates from 6 April 2027. This affects landlords and individuals who receive rental income. The higher rates will reduce net rental returns, particularly when combined with fixed thresholds and other Budget changes.

Many landlords will experience increased tax liabilities even where rental income remains unchanged. In addition, the new ordering of reliefs and allowances (explained later in this article) may limit the ability to offset property profits using certain reliefs.

Savings income such as interest from bank accounts or fixed term deposits outside ISAs will also be subject to higher tax rates from 6 April 2027. This change is particularly relevant because many savings products currently offer higher interest rates than in previous years.

• Basic rate increases from 20 percent to 22 percent.
• Higher rate increases from 40 percent to 42 percent.
• Additional rate increases from 45 percent to 47 percent.

Although the Personal Savings Allowance remains unchanged, more individuals will fall into taxable territory due to higher interest returns and the effect of frozen thresholds.

Dividend tax rates will rise from 6 April 2026. These changes will affect anyone receiving dividends, including company directors who take part of their remuneration in the form of dividends.

The dividend allowance was reduced in last year’s budget, which means a greater share of dividend income is taxable. Combined with frozen thresholds, more dividend income is likely to fall into the higher and additional rate bands in the coming years.

A technical but significant change in the 2025 Budget concerns the ordering of certain reliefs and allowances. Those that are deductible at steps 2 and 3 of the income tax calculation will now only apply to property, savings and dividend income after they have already been applied to other types of income.

• Reliefs cannot be used as freely to reduce tax liabilities on these forms of income.
• Property and dividend income may attract higher effective tax.
• Individuals with multiple income sources may face unexpected increases in tax even if their reliefs remain unchanged.

This change takes effect alongside several of the rate increases outlined above.

A new limit will apply to the national insurance advantages of salary sacrifice pension contributions from April 2029. Under the new rule, the first 2,000 pounds of salary sacrificed into a pension each year will remain free of employer and employee NICs. Contributions above this amount can still be made through salary sacrifice but will be subject to NICs.

• The NIC exemption applies only to the first 2,000 pounds of sacrificed salary each year.
• Pension contributions above this level will continue to receive income tax relief but will not receive NIC relief.
• The government expects typical contribution levels to fall within the exempt threshold.
• Higher earners and directors making larger contributions will experience the greatest impact.

Benefits in kind will be reported in real time through PAYE from 6 April 2027. P11D forms will be abolished. Employers will need to ensure that payroll systems can process benefits throughout the year and that valuations are accurate at the time of reporting.

• All taxable benefits will be processed via RTI.
• P11D and P11D(b) submissions will no longer be required.
• Employees will see the tax on benefits reflected directly in their pay.
• Employers must maintain accurate and timely reporting practices.

From 1 April 2026, the government will double the penalty for submitting a late Corporation Tax return. This forms part of wider efforts to improve compliance and reduce outstanding tax debts.

Businesses that regularly file close to the deadline or file late should be aware of the increased costs associated with delayed submissions.

The government has announced a new High Value Council Tax Surcharge for homes valued at more than 2 million pounds. This measure will apply from April 2028 and is expected to raise significant revenue from high value properties.

Valuations will use 2026 reference values. Owners of properties in affected areas, particularly London and the South East, are likely to see notable increases in their annual council tax liabilities.

A new per mile charge for electric vehicles will apply from 2028. This measure is intended to reflect the reduced fuel duty revenue from the transition away from petrol and diesel vehicles.

• Fully electric vehicles will be taxed at 3 pence per mile.
• Plug in hybrid vehicles will be taxed at 1.5 pence per mile.

Drivers will estimate mileage at the time of vehicle tax renewal and later confirm this through odometer readings. Electric vehicles will still benefit from lower running costs, but the new per mile charge introduces an additional cost for EV ownership.

The Budget 2025 contains several measures relating to savings incentives and tax advantaged accounts.

• The Help to Save scheme will become permanent.
• The overall ISA annual contribution limit remains at 20,000 pounds.
• From April 2027, the cash ISA limit for individuals under 65 will be reduced to 12,000 pounds.
• The remainder of the ISA allowance can still be used across other ISA products.

These changes are particularly relevant for individuals who save significant amounts in cash ISAs or who plan to diversify their savings strategies before the new limits apply.

The government intends to strengthen HMRC’s compliance activity through additional investment and new administrative measures. This includes more active debt collection, increased use of data and a greater focus on on time filing and payment.

• Additional funding for HMRC to reduce the tax gap.
• Potential changes to Self Assessment that could lead to more frequent automated payments throughout the year.
• Requirement for all VAT invoices to be issued as structured e invoices from April 2029.

This direction aligns with ongoing digitalisation efforts across the tax system.

A number of additional measures were included in the Budget. Some of these notable additions are below:

• Prescription charges will be frozen at 9.90 pounds for one year.
• The 5 pence fuel duty cut is extended until August 2026, with rates gradually returning to 2022 levels by March 2027.
• The National Living Wage will rise to 12.71 pounds per hour from April 2026.
• The Triple Lock will continue for the duration of this parliament.
• State Pensions will increase by 4.8 percent in April 2026.

There are no changes in the following areas:

• VAT
• IR35
• Business Asset Disposal Relief
• Main corporation tax rates and marginal taper
• Income tax thresholds for PAYE (other than the freezes noted earlier)

The 2025 Budget contains a wide range of measures that will affect taxpayers in different ways over the coming years. Many changes relate to the taxation of property income, savings income and dividends, while others focus on national insurance treatment, reporting requirements and compliance. The interaction between frozen thresholds and rising rates will be an important theme throughout the period covered by the measures.

Taxpayers should take note of the dates when changes begin to apply and consider how these developments may influence their tax position in the future.

• Budget date is set for 26 November 2025 and many changes are still speculative.
• Contractors should check whether more clients become “small” under IR35 thresholds from 6 April 2025.
• MTD for Income Tax (ITSA) starts from 6 April 2026 for >£50k income, expanding in stages.
• Corporation tax is unlikely to change (25% main rate, 19% small profits rate), but reliefs and allowances may change.
• VAT/Making Tax Digital compliance and digital bookkeeping remain vital regardless of Budget outcomes.

Budget choices never happen in isolation. Public finances, the Office for Budget Responsibility’s forecasts and market sentiment all influence what a Chancellor can do. Current reporting points to tight borrowing constraints and limited fiscal headroom, making targeted measures and administrative refinements more likely than sweeping tax-rate changes.

For small businesses this backdrop matters. When growth is subdued and revenue collection becomes a priority, governments often seek to:

• Encourage investment through capital allowances and reliefs
• Improve compliance with clearer guidance and stronger data collection
• Drive digital record-keeping and real-time reporting

These priorities suggest a pro-digital, pro-compliance environment in the months ahead, with incentives aimed at productive investment. The safest baseline assumption is that the government will favour steady evolution over surprise reforms.

• Keep your books tidy and reconciled.
• Plan cash flow and tax forecasts ahead of time.
• Engage early with your accountant on remuneration, dividends and pension contributions.

Whatever the Budget delivers, those foundations will make it easier to respond quickly.

IR35 and the off-payroll working rules are designed to ensure engagements are taxed correctly. In the private sector, medium and large clients must determine employment status. Where an engager qualifies as small under the Companies Act, responsibility for contract determination reverts to the contractor’s personal service company (PSC).

From accounting periods beginning on or after 6 April 2025, new higher size thresholds under The Companies (Accounts and Reports) (Amendment and Transitional Provision) Regulations 2024 mean that more engagers will fall within the “small” definition. This change will shift the burden of proof back to the contractor’s company in some cases.

For contractors, this means renewed focus on documentation, contracts and evidence of working practices. Where responsibility shifts, your PSC becomes the decision-maker again, and HMRC will expect to see clear reasoning behind each determination.

• No wholesale rewrite is expected — the trend remains one of refinement, not reform.
• Increased HMRC education and enforcement activity directed at medium and large engagers.
• Updated guidance drawing on tribunal decisions, especially for borderline cases.
• Continued scrutiny of supply-chain due diligence, especially where multiple agencies or umbrella companies sit between client and contractor.

1. Align contracts with reality. Ensure the written terms reflect how work is performed day to day.
2. Document working practices. Keep concise notes on control, mutuality and substitution.
3. Invoice consistently. Regular invoicing and project documentation support independence.
4. Review status when scopes change. A new project or altered responsibilities may affect your determination.
5. Check client size early. Determine whether new clients qualify as small under the updated thresholds.

The Making Tax Digital for Income Tax Self Assessment (MTD ITSA) rollout is confirmed and will apply in phases based on total business and property income.

Taxpayers within scope will file Quarterly Updates, an End of Period Statement and a Final Declaration through compatible software. The system is designed to reduce errors and improve timeliness of information submitted to HMRC.

Although the timetable is set, some refinements may appear in the Budget or subsequent guidance:

• Clarifications for landlords with multiple or jointly owned properties.
• Transitional easements for the first reporting year, such as light-touch penalties.
• Detailed guidance on how quarterly updates interact with payments on account.

• Adopt digital bookkeeping if you have not already.
• Reconcile bank feeds weekly and label income and expenses accurately.
• Keep property records by address and track supporting documents.
• Test MTD-compatible software before you are required to use it.
• Ask Sherwin Currid to review your income profile so you know exactly when you enter the regime.

Since April 2023, the UK corporation-tax framework has featured three key elements:

• 25% main rate for profits over £250,000
• 19% small-profits rate for profits up to £50,000
• Marginal relief tapering between the two thresholds

Associated-company rules apply when businesses share common control, which can adjust these limits.

The Chancellor is unlikely to alter headline rates in 2025. Instead, the Budget may focus on:

• Consultations on investment reliefs, such as capital allowances or intangible-asset deductions.
• Simplification for small companies — potentially streamlining marginal-relief calculations.
• Targeted incentives for digital, green or high-productivity sectors.

Some commentators expect reviews of Capital Gains Tax and Business Asset Disposal Relief, which affect business sales and restructuring. A move towards aligning CGT rates more closely with income-tax levels or tightening relief conditions could alter after-tax proceeds for owner-managers planning exits.

1. Prepare quarterly profit forecasts so you can plan dividends and bonuses with accurate tax estimates.
2. Review pension-contribution headroom and incorporate this into remuneration planning.
3. Time capital investment carefully to maximise available reliefs.
4. Monitor associated-company counts and ensure group structures are properly documented.

Making Tax Digital for VAT is a mandatory piece of compliance for nearly all VAT-registered businesses. Digital record-keeping and linked software submissions are required for every return period.

• Reconcile regularly to prevent quarter-end rushes.
• Review coding between income, expenses and VAT returns to ensure accuracy.
• Retain evidence for all expenses, including exempt or zero-rated supplies.
• For cross-border trade, apply place-of-supply and reverse-charge rules consistently and keep records of customer location.

The Chancellor is unlikely to raise the main VAT rate, but there could be movement on thresholds. Consultations have floated the idea of lowering the VAT-registration threshold. Even modest changes can affect small traders, so reviewing turnover levels before the Budget is sensible.

Strong bookkeeping and digital processes remain the best defence against penalties and missed input-tax claims.

The government’s Transforming Business Rates Interim Report signals possible changes aimed at retail, hospitality and leisure premises. Proposals include permanent lower rates for properties with rateable values below £500,000, a new high-value rate for larger sites, and transitional relief to reduce sharp increases. Updates to the Small Business Rates Relief (SBRR) scheme and continued improvement relief could follow.

For businesses that rent or own premises, these changes could significantly impact overheads from 2026 onwards. Factoring them into cash-flow forecasts now will help avoid surprises later.

Expect continued focus on the consistency of employment and self-employment definitions. HMRC’s real-time information system has improved payroll visibility, and compliance checks often centre on PAYE accuracy

Budgets frequently use capital allowances to steer investment. The current full-expensing regime for qualifying plant and machinery encourages spending on equipment and technology. It may be extended to leased assets, and new green-investment tax breaks could appear to support net-zero goals without new headline taxes.

Before committing to major purchases:

• Run a profit forecast to see how timing affects cash flow.
• Confirm whether assets qualify for full expensing or the Annual Investment Allowance.
• Keep invoices and usage evidence ready for year-end review.

The government has been pursuing simplification across forms and reporting. Watch for Budget announcements that streamline Self-Assessment pages or align thresholds between taxes.

• Review contracts and ensure they match actual working practices.
• Keep concise evidence files on control, substitution and mutuality.
• Schedule regular IR35 status reviews.
• Prepare to take back IR35 responsibility where clients become “small”.
• Keep company records tidy and consistent.

• Confirm income levels against MTD ITSA thresholds.
• Choose intuitive software such as Xero and FreeAgent with reliable bank-feed integration.
• Reconcile weekly and capture receipts promptly.
• Create a timetable for quarterly updates.
• Request a tax projection before payments on account to smooth cash flow.

• Maintain a rolling 12-month profit forecast and update it quarterly.
• Review remuneration mix and pension strategy before year-end.
• Plan capital expenditure and align delivery dates with accounting periods.
• Check VAT coding and perform a pre-filing review each quarter.
• Keep board minutes and dividend vouchers fully up to date.

We work daily with contractors, freelancers, tradespeople and owner-managed companies, helping them stay compliant, minimise surprises and make confident decisions.

Sherwin Currid will publish a full post-Budget summary following the announcement on 26 November 2025, outlining what has changed, who is affected and what to do next. If you have any questions in the meantime, please feel free to contact us.

When deciding between running a small business as a sole trader or setting up a limited company, it is important to know how each legal structure works.

As a sole trader, you and the business are one and the same; you can operate your business under your own name or use trading name of your choice. Sole traders have unlimited liabilities for business debts and you risk personal assets if you run into issues. You will report your income through a self assessment tax return or, from April 2026, Making Tax Digital for Income Tax submissions and pay income tax and national insurance contributions on any business profits.

Working through a limited company is a very different proposition. A company is its own legal entity, which means it is separate from you and therefore directors have limited liability with respect to company debts. The process of setting up a limited company involves you registering the company with Companies House and having to submit annual accounts, corporation tax returns and annual confirmation statements. Shareholders of companies can also choose to pay themselves via dividends as well as through a payroll, offering greater flexibility for tax planning over a sole trader.

The legal status of a sole trader is very different from a limited company. The registration process for a sole trader with HMRC is very simple but, as a sole trader, if the business gets into debt, you can lose your personal assets in order to pay what you owe. This is because you and the business are the same entity and therefore you have unlimited liability for business debts.

A limited company however is separate to its owners and is responsible for its own liabilities. The company is responsible for its own assets, money, and bills meaning as the owner you have limited liability for business debts, protecting your personal assets. The only time you may incur personal liabilities is if you have given a personal guarantee for a debt or fail to fulfil your duties as a limited company director.

There are of course merits to operating as a sole trader, namely simpler taxation reporting requirements.

Limited companies have more complex reporting requirements and tax implications than sole trader businesses. Where sole traders only need to file a personal tax return each year a limited company must file annual accounts, a corporation tax return, and a confirmation statement each year. If you choose to pay yourself a salary from your company you will also need to make monthly payroll submissions to HMRC. Finally, if you are to take dividends from your company you will also need to submit a personal tax return for each year. The cost of an accountant to handle compliance for a limited company can quickly add up when compared to the fees for a sole trade.

That said, limited companies offer much greater flexibility with respect to tax planning and there are numerous ways to ensure both you and your company are tax efficient. Operating through a limited company you can choose to pay yourself via salary, dividends on shares you own, pension contributions or a blend of these. Your accountant will be able to assist you with tax planning and can ensure that you are earning tax efficiently from your business.

Making Tax Digital (MTD) for Income Tax is the next step in the government’s plan to make tax reporting simpler and more accurate. This change will impact sole traders, depending on level of turnover, from April 2026.

MTD for Income Tax rules for self-employed sole traders apply to individuals with turnover in excess of £50,000 from the 6th April 2026 and those with turnover exceeding £30,000 from 6th April 2027. Under the new legislation you will be required to keep digital accounting records and provide quarterly updates and an annual final declaration. These new requirements will greatly increase the amount of work needed for sole traders to remain compliant and may be a factor in looking to begin trading as a company.

If you are interested in learning more about the effect that MTD IT will have on sole traders you can read more on our page for the self employed and MTD IT.

There are several advantages of incorporating your business that we have outlined below. If you would like to discuss how setting up a limited company for your business could benefit you please get in touch with one of our team.

Limited liability is one of the main differences between the two business structures, and is why most people set up a limited liability company. When you set up a limited company, the company becomes a separate legal entity to yourself. It means the business owns its own bank account, business assets and debts; all under the company name. Allowing you to protect your personal assets.

There are still some instances where you may be personally liable for the company’s debts; for instance if you personally assure a business loan or fail to meet your obligations as a director.

Limited companies offer much greater flexibility when paying yourself and open the door for more options when tax planning with your accountant. Sole traders must pay income tax and national insurance on all of their profit in a year and therefore are limited in ways to ensure they are tax efficient.

The profits from a limited company will attract a corporation tax charge but you can include your own salary and some pension contributions in your company’s expenses which will reduce the corporation tax bill. If you are a shareholder you can also choose to pay yourself dividends when your company has sufficient reserves to do so to make use of your dividend allowance and lower rates of tax.

By operating your business as a limited company you will have a greater range of options when looking to plan your earnings. Your accountant will be able to advise you on how best to pay yourself and advise on the implications of other sources of income on your personal tax bill.

At Sherwin Currid we have plenty of experience with helping small business owners make the change to trading as a limited company. All of our clients have a dedicated accountant that can help you with keeping track of your business finances, preparing and submitting financial statements, choosing a company structure and much more.

If you already have, or are thinking of setting up, your own business and would like to discuss what type of business is right for you, please get in touch.

The company IDV requirements will affect all directors, People with Significant Control (PSCs) and those acting on behalf of companies. Even if you are a longstanding officer of a company there will be a requirement to complete an IDV check.

The new requirements will be phased in over the course of the year.

The first phase gives company directors and PSCs the choice to do their identity verification themselves, on a voluntary basis, online from the 8th April, 2025. While it is not yet mandatory to complete the identity verification you can do so now to ensure you are verified. More detail on how to do this can be found here.

The exact date of the next phase, making verification mandatory, has not been provided yet but this is expected to come into effect in Autumn 2025 for new directors. For existing companies, the identity verification process will be rolled together with the Confirmation Statement filing over the following 12 months from the date that it becomes mandatory.

By autumn 2026, every company will need to have followed identity verification requirements.

As the deadline gets closer, directors need to be sure they are ready for the new identity verification requirements. The first step will be to make sure that all directors and PSCs listed for your company are aware of the identity verification requirements. Each person will need to verify and give a unique identity number, known as a Companies House personal code, to Companies House when submitting filings.

Directors and PSCs of multiple companies can connect their verification to all appointments using their unique number. This will help make ongoing compliance easier.

You can verify your identity in two ways. You can do it yourself with Companies House or go through an Authorised Corporate Service Provider (ACSP).

Completing the verification yourself is very simple and uses the GOV.UK One Login. This new digital account lets you verify who you are with documents that you should have to hand, you will also need a mobile phone with a camera to take a photograph of yourself. The link to verify your own identity can be found here. Once you have verified you will be given a unique identifying number that you must remember to be able to file company documents.

Alternatively, you can ask an ACSP, such as your accountant, solicitors, or company formation agents, to complete identity verification checks on you. These corporate service providers have to sign up with Companies House and must be registered with an Anti-Money Laundering (AML) supervisory body.

To get through the online identity verification checks, you will need to provide a photo ID. These are some types of photo ID you can use:

• A passport with a biometric chip
• A UK photocard driving license.
• A UK biometric residence permit or card.

If you do not have any of the above, you can verify through an ACSP or in person at a post office but you will need to provide the documents that they request from you.

If you would rather not complete the verification yourself then you can have your identity checks carried out by an Authorised Corporate Service Provider. ACSPs must be registered with Companies House with an ACSP account and must be regulated by an AML supervisory body. Professional service providers such as accountants and solicitors will be able to do this for you and will require you to provide documents from approved lists as evidence of your identity.

After you have completed your identity verification check, you will receive an unique identifying number. You will need to keep this number to hand as it will be required to make submissions on Companies House as well as linking your verified identity to your records as an officer of a company.

For officers of an existing company you will need to verify and provide your unique identifier in order to file your next Confirmation Statement once the legislation comes into effect. For new companies, all officers will need to complete their check before the registration process.

The aim of the Making Tax Digital changes is to improve reporting accuracy and simplify record keeping for businesses and individuals. By keeping your accounting records on MTD compliant software and submitting frequent returns to HMRC you can have a clearer picture of your tax liability and HMRC will be able to keep track of peoples income in a more detailed manner.

From April 2026 Making Tax Digital for Income Tax will be phased in for landlords and sole traders earning above £50,000. This threshold will decrease to £30,000 in 2027, and drop further to £20,000 in 2028.

The thresholds are based off the total turnover from all rental and self-employed income, including foreign property income as well as UK rental income. Even if you do not earn more than the threshold from one of these sources alone it is important to know the level of your income from each of these qualifying sources as it is the total amount that decides if you are obliged to enrol in MTD IT.

Even if you do not meet the threshold you can opt to enrol yourself in MTD IT and follow the same reporting in preparation for when you will need to.

The key reporting change that is being introduced with MTD IT is the requirement to submit quarterly updates to HMRC detailing your income and expenses for each period. These submissions must be made using MTD compliant software and cannot be typed in from spreadsheets or physical working papers. The quarterly submissions will be due on the 7th of August, November, February and May each tax year.

At the end of each tax year a final declaration will be due to HMRC by the 31st January of the following year, in line with the current deadline for Self Assessment Tax Returns. This final declaration must also contain all other sources of income that you have received over the course of the tax year, such as PAYE income and dividends, and will replace the standard Self Assessment process. This declaration must also be made from your MTD software.

Choosing the right software is vital to ensure that you are compliant with the new Making Tax Digital rules. There are plenty of available options but you should ensure that you choose a software that will allow you to make not only your quarterly submissions, but also the final declaration to HMRC.

If you are obligated to report on MTD then it is worth looking into the right software for you. Your accountant should be able to advise you on the best fit as well as guide you through keeping your records digitally.

The right MTD software should have these key things to help you with your record keeping:

• HMRC approval: HMRC have compiled a list of approved software for MTD IT which you can view here.
• Real time bank feed: You should be able to link your business bank account straight to your software. This lets you bring in your bank payments and records automatically.
• Multi-stream record keeping: The software should let you keep digital records for each of your income sources.
• Quarterly reporting and final declaration submission

If you are unsure on which software will suit you best then you should speak to your accountant who should be able to recommend a software that will be the best fit for you.

Sole traders that are obliged to register for MTD IT should begin to prepare for the new rules now to ensure compliance with the new rules. While the move to MTD brings challenges there are also some benefits from moving to digital record keeping

The biggest change for sole traders will be the need to keep digital records throughout the year using cloud accounting software. If you have not used online accounting systems before this will be a big change in the way that you keep your records. However, one of the advantages of keeping digital records is that you will be able to gain real time insights into your business and can use the features of software to stay on top of their invoicing and expenses.

Another advantage of using good cloud accounting software is that you will be able to see live tax estimates, helping you to ensure you keep enough money back to pay your tax bill.

Landlords with UK and foreign property rental will fall under the scope of MTD IT based on their qualifying income. If you expect to make more than £50,000 in 2026/27 from all of your rental and sole trade income, you will need to register by April 2026. If you earn over £30,000 or £20,000, you need to follow the rules by April 2027 and April 2028 respectively.

One complication of the rules for landlords is that UK and Foreign rental income will need to be reported separately and therefore if you have both your quarterly reporting requirements will double to 8 submissions throughout the year with a final declaration that encompasses both following the year end.

At Sherwin Currid we appreciate that the transition to Making Tax Digital for Income Tax can seem overwhelming. We offer a comprehensive service to those needing to make MTD IT submissions to ensure that you meet your filing deadlines. For more information on how Sherwin Currid can support you please see our page on MTD for Income Tax here.

If you wish to discuss how we can help you meet the new MTD requirements please get in touch to arrange an initial consultation.