A letter from HMRC What should I do?
If you have received a letter from HMRC advising that you need to register for Making Tax Digital (MTD) for Income Tax, you should take action now. Whether you intend to manage the process yourself, seek professional advice or believe you may qualify for an exemption, it is important to establish your position as early as possible. The first quarterly reporting period has already ended and the first filing deadline is 7 August 2026, so delaying could leave you with very little time to implement software and prepare your records.
Making Tax Digital for Income Tax FAQs: Your Questions Answered
Do I have to register if I think I’m exempt?
Not necessarily—but you should confirm your position as soon as possible. While there are exemptions available, they are relatively limited and, in many cases, require HMRC approval. Some exemptions, such as those currently applying to certain trusts and partnerships, are only temporary. Others, such as digital exclusion, depend on individual circumstances including health, age, internet availability or religious beliefs. Even if you are exempt for 2026/27, you may still need to comply in future years.
Does quarterly filing mean I pay tax every quarter?
No. Payment dates remain unchanged. Most taxpayers will continue to make payments in January and July. Quarterly submissions provide HMRC with summary income and expense information throughout the year and help estimate your likely tax position before the Final Declaration.
Do I still complete a tax return?
Yes. Quarterly updates are followed by a Final Declaration at the end of the tax year, which replaces the current Self Assessment tax return and confirms your final taxable income.
I’m not affected until 2027 or 2028. Should I still do anything now?
Yes. Those entering the regime in 2027/28 are currently expected to move directly into the standard penalty regime. Implementing software and becoming familiar with quarterly reporting now allows time to identify and resolve issues before penalties become a possibility.
How Ready Are Taxpayers?
HMRC expects approximately 864,000 taxpayers to fall within the scope of MTD for Income Tax from April 2026. Current estimates suggest only around 20–25% have registered so far. At Menzies, we have already onboarded approximately 20% of our anticipated MTD client population, with all engaged clients successfully set up on Xero ahead of the first quarter end.
Do I have to use accounting software?
Yes. MTD requires digital records to be maintained and quarterly updates submitted using HMRC-compatible software. At Menzies, our preferred platform is Xero because of its ease of use, competitive pricing and the support we are able to provide. Clients are free to use other software, although our ability to troubleshoot issues may be more limited.
Can HMRC see every transaction in my software?
No. HMRC receives summary totals only. They do not receive copies of invoices, receipts or individual transactions, nor do they see personal transactions recorded within your accounting software.
I’m VAT registered. Can I make MTD easier?
Potentially, yes. If your VAT quarters do not align with your MTD reporting periods, it may be worth changing them. Aligning VAT, accounting and MTD reporting dates can reduce administration and avoid multiple reporting deadlines.
What level of support do I actually need?
Menzies can provide support ranging from advice only, software implementation and training, review of your quarterly submissions, through to a fully managed bookkeeping and compliance service.
• DIY – We’ll advise you, you do the bookkeeping and submissions.
• Software Setup & Training – We’ll implement Xero and train you.
• Review Service – You prepare the records, we review before submission.
• Fully Managed – We complete the bookkeeping and submissions for you.
Have You Received a Letter from HMRC?
Registering for Making Tax Digital (MTD)
Why acting now matters.
If you have received a letter from HMRC, action should be taken now. Registering, confirming exemptions, selecting software and implementing suitable processes all take time. Even if you are not mandated until a later year, preparing early can reduce stress and minimise errors.
How can Menzies help?
We can provide initial advice, software selection and setup, Xero onboarding and training, review of quarterly submissions, ongoing compliance support and full bookkeeping services.
Contact us
If you have any questions, please contact your usual Menzies adviser, David Truman, your Private Client team, or Jennie Millar in Systems Advisory.
