Making Tax Digital for Income Tax

How it works

You’ll log receipts and invoices little and often

To do this, you’ll use recognised bookkeeping or accounting software that works with Making Tax Digital for Income Tax – such as an app on your phone or laptop.

Send quarterly updates

This is a quick way to let HMRC know about your income and expenses from sole trading and property – every three months, straight from your software.

These quarterly updates aren’t tax returns

They’re just simple summaries of how your business is doing, in four smaller chunks, pulled from your records.

If you’re logging information as you go along, quarterly updates will simply be the touch of a button.

You’ll be able to see an estimate of your tax bill to plan ahead after sending each update.

You won’t pay four tax bills a year

The deadline for paying your tax will still be 31 January.

You’ll pay this by signing in to your online tax account through GOV.UK or on the HMRC app – just like now.

When you’ll send your quarterly updates

These are the standard update periods and deadlines, which line up with the tax year (6 April to 5 April).

Update periodUpdate deadline6 April to 5 July7 August6 April to 5 October7 November6 April to 5 January7 February6 April to 5 April7 May

If you prefer, you can choose to match your update periods to the calendar year.

You’ll still submit a tax returnSoftware can tally up the whole year from your quarterly updates. It will pull these into an end-of-year tax summary for you. So there’s less form filling.

You’ll check everything looks right

You still make any adjustments before submitting your tax return, such as including other sources of income like bank interest or pensions. And you can claim tax reliefs if you’re eligible.

All good? Then you’ll tap submit by 31 January

This will send your tax return to HMRC, straight from the software. Job done.

HMRC will use this information to build your tax bill

The new system won’t change the way you pay Income Tax or the dates you need to pay it.

Check if you need Making Tax Digital for Income Tax 

You’ve probably got some questions

Why is the way you do tax changing?What if I earn money from both working for myself and property?Making Tax Digital for Income Tax has been delayed before – will it actually happen?Do limited companies have to use this?Do partnerships have to use this?What if I’m a partner in a business?What if I miss a submission deadline?I already use software to submit my Self Assessment tax return – can I keep using this?Can I get an exemption?Do the quarterly updates really matter – can’t I just sort everything out through the end-of-year tax return?What happens if I miss out some income and expenses from a quarterly update – do I need to resend that update?Where can I build my digital skills to get ready?What if software isn’t working the way it should?What about the Construction Industry Scheme (CIS)?I think my total turnover will be between £30,000 and £50,000 – is there a timeline to help me get ready?

All content is available under the Open Government Licence v3.0, except where otherwise stated

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Self Assessment commercial software suppliers

Find software suppliers for tax returns, supplementary pages and attachments.

From:

HM Revenue & Customs

Published

1 January 2014

Last updated

9 February 2026 — See all updates

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Commercial software suppliers for Self Assessment

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Details

You can use the software suppliers in this list to submit valid tax returns, supplementary pages and attachments for the products in this guide.

Some commercial software includes a feature that allows you to get details from HMRC to help you:

• complete your client’s Self Assessment tax return if you’re an agent

• complete your Self Assessment tax return if you’re an individual

Check with your software supplier to find out if their product includes the feature.

If you sign in to HMRC online services using GOV.UK One Login, you will need to create a unique user ID and password to submit your Self Assessment tax return using commercial software.

Get technical support if you’re a Self Assessment software developer.

Close Companies – have your say

HMRC is proposing to bring in major new reporting requirements for Close Companies. The Close Company rules exist to prevent small groups of individuals from extracting profits in ways that avoid income tax. Because most small, incorporated businesses are close companies, the impact could be huge. This could be a significant operational and financial burden on hundreds of thousands of small businesses at a time when they are already swamped by waves of change rising costs.

There’s a consultation open until 10th June 2026. Please have your say. Reporting company payments to participators — modernising the reporting framework - GOV.UK

In simple terms, a Close Company is one that is controlled by a small number of people. Most small, owner‑managed limited companies fall into this category.

This is a specific UK tax concept and understanding it matters because Close Companies face additional tax rules and reporting obligations, especially around:

• director’s loan accounts

• dividends and distributions

• transactions with participators

• new reporting requirements from 2025/26

HMRC defines a Close Company as a company that is under the control of:

• Five or fewer ‘participators’, or

• Any number of participators who are also directors

A participator is anyone with a share or interest in the company’s capital, typically shareholders, but it can also include loan creditors or others with rights to company assets. HMRC also says a company is Close if more than half of its assets would go to five or fewer participators (or participator‑directors) if the company were wound up.

The following types of companies are typically Close:

Most small, owner‑managed limited companies

If a company is owned by:

• a single director‑shareholder

• a husband‑and‑wife team

• a small group of founders it is almost certainly a Close Company.

Family‑owned companies

Are Cloes where control sits with a small number of family members.

Companies controlled by their directors

Even if there are more than five shareholders, if the directors collectively control the company, it is still Close.

Companies where five or fewer people control more than 50% of shares or voting power

This includes companies with:

• multiple minority shareholders

• a small controlling block

Companies where five or fewer people would receive most assets on winding up.

Companies are not close if:

• They are widely held (e.g., a large public company)

• No small group of participators controls them

• They are controlled by a large, diverse shareholder base

HMRC refers to these as “Open Companies”.

Close Companies are subject to special tax rules, including:

• Loans to participators (director’s loan account rules)

• Extended definition of distributions

• Close investment‑holding company rules

• Additional reporting requirements (including new 2025/26 SA disclosures)

HMRC emphasises that these rules exist to prevent small groups of controllers from extracting profits without paying the correct tax.

Consultation on new reporting requirements:

HMRC is consulting on proposals to make it a requirement for Close Companies to report every transaction between the company and its participators (shareholders/directors), including:

• Cash withdrawals

• Loans and repayments

• Asset sales or purchases

• Dividends and distributions

• Any transfer of value

This goes far beyond current (CT600A) reporting and would create a new, detailed reporting burden for small companies. This means a huge increase in reporting requirements and additional admin burden for small businesses.

Concerns:

Glenn Collins from the accountants’ body ACCA says: “HMRC is underestimating what is already reported so we're concerned about duplication. Small companies already report:

• Dividends on directors’ Self-Assessment returns

• Dividend and directors’ loan account reporting in statutory accounts

• Related‑party transaction reporting

• New 2025/26 SA reporting requirements for close‑company directors

The consultation doesn't fully acknowledge this existing data, raising concerns about duplication and unnecessary burden in terms of time and cost”.

There’s a risk that all director cash withdrawals must be reported

The proposals appear to require disclosure of every cash withdrawal, even when:

• The director is owed money by the company

• The transaction is routine

• The movement is temporary

This could create thousands of reportable items for even the smallest companies.

 There’s no clarity on reporting timelines

The consultation doesn’t say:

• When reporting would be required

• Whether it is annual, quarterly, or real‑time

• How corrections would be made

Given HMRC’s track record with third‑party reporting, this is a major concern.

There’s a high risk of errors and penalties

HMRC proposes using the normal CT penalty regime, but:

• Close Company transactions are complex

• Errors are common

• HMRC systems often hold incorrect data

• Correcting HMRC data is costly and difficult

This raises the risk of penalties for compliant taxpayers.

There’s no explanation of how HMRC will use the data

The consultation doesn’t explain:

• Why HMRC needs this level of detail

• How it will use data already held by Companies House

• How it will avoid duplication with SA reporting

• Whether the data will improve compliance outcomes

This lack of clarity makes it difficult for small companies to assess the value of the proposals.

This adds up to a significant additional administrative burden for small companies

Small companies will face:

• More bookkeeping

• More reconciliations

• More detailed tracking of directors’ loan accounts

• More alignment of company and personal records

• More software requirements

For many micro‑companies, this is a major new cost which will reduce their already stretched margins to breaking point.

Software and systems may not be ready

The consultation assumes software will support the new requirements, but:

• Many small companies use basic or manual systems

• Current software does not track participator transactions in the detail required

• Integration with HMRC systems is unclear

This could force small companies to upgrade systems at additional cost.

There’s no recognition of the challenges advisers face

Matt Gambold Co-Founder & Director of ChadSan Limited (business accountancy) says: “The effect of this on a business owner’s ability to focus on their day job can’t be underestimated. If these proposals are adopted it will put greater pressure on the relationship between advisors and their small business clients.  Apart from additional layers of detailed reporting to HMRC this will increase the (incorrect) perception amongst some business owners that the advisor is working against them and the increase in admin for the advisor is likely to increase fees.  Small business owners will resent having to bear additional cost for reporting that adds absolutely no value to their operations at a time when tech advances are leading to an expectation of more value add and advisory level services. The minority of dishonest small business owners will continue to be dishonest.”

Tax advisers already struggle with:

• Poor client records

• Incomplete director loan data

• Misaligned personal and company information

• High correction costs when HMRC holds incorrect data

Related‑party disclosure rules are already expanding

FRS 102 (September 2024) significantly increases related‑party disclosure requirements for small entities. This means:

• More detail already needs to be included in statutory accounts

• HMRC will already receive this information

• The consultation does not acknowledge this overlap

This raises questions about why additional reporting is needed.

Impact on Small Businesses

If these proposals are implemented as drafted, they will:

• Create substantial new admin burdens

• Duplicate existing reporting

• Increase compliance costs

• Increase the risk of penalties

• Require new bookkeeping processes

• Require new software or system upgrades

• Add complexity to already complex director/shareholder transactions

For many small companies, this could be a material operational and financial burden.

Questions for HMRC:

1. Why is additional reporting needed when extensive data is already provided via SA, CT600, statutory accounts and Companies House?

2. How will HMRC avoid duplication of existing reporting requirements?

3. Will HMRC publish clear reporting timelines and formats before implementation?

4. How will HMRC ensure software providers can support the new requirements?

5. What safeguards will be in place to prevent penalties for minor or technical errors?

6. How will HMRC ensure that incorrect data can be corrected easily and without cost?

7. What analysis has HMRC done on the administrative burden for small companies?

8. Will HMRC provide exemptions or simplified reporting for micro‑entities?

9. How will HMRC use the data it already holds before requesting more?

10. Will HMRC publish a full impact assessment before legislating?

If you’re a small business owner or an adviser to small businesses/Close Companies please have your say by responding to the consultation. It closes on 10th June and you can find details here: Reporting company payments to participators — modernising the reporting framework - GOV.UK