A leading Midlands accountancy firm is urging small business owners not to get caught out by a major tax legislation change coming into force in April.
HB&O, which has offices in Coventry, Leamington and Birmingham, is warning that many owner-managed business might not be aware of the change or could miss the deadline as they juggle the day-to-day pressures of running a business.
Making Tax Digital for Income Tax (MTD) is a government initiative designed to modernise the tax system, requiring taxpayers to keep digital records and report income and expenses more regularly.
Small business owners, landlords and sole traders now have less than two months to act before a major change is implemented in April.
From 6 April, 2026, the rules will apply to anyone who has generated more than £50,000 gross income from self-employment, property or a combination of the two in the 2024/25 tax year.
The taxpayer will be required to submit quarterly reports along with an end of year final declaration instead of the traditional self assessment tax return.
Next year, HMRC will drop the threshold to £30,000 and by April 2028 the threshold will go down to £20,000 – with thousands of additional landlords and business owners brought under the legislation every year.
Jack Dunne, a Client Manager at HB&O, has been speaking to businesses at networking events across the region to raise awareness of the change and the steps taxpayers effected must take by 6 April.
He said: “Many of the people that will be affected by the change in April are busy owning, managing and working in their business.
“They will be laser focused on growing their business, so there is a chance that many small-owner managed businesses may be oblivious to a major change that is only a couple of months away.
“We have seen a number of enquiries over recent weeks regarding the change, and it is a hot topic at events we have attended across the region.”
HB&O is encouraging businesses and landlords to review their position early to confirm whether they fall within the first group affected from April 2026 and plan accordingly.
Jack also suggests that it isn’t too early for people who will be impacted by the scheme over the next two years to start the change now.
He says that making the change can streamline accounts and allow business owners to make real-time decisions supported by up to date, accurate data.
“The beauty is you don’t need to wait. You can get ready now and make sure it isn’t a real concern when it comes round,” he said.
“People can get ahead of this by changing the way they handle record keeping. If you move onto a user-friendly piece of software now, then Making Tax Digital is of virtually no consequence.
“The biggest leap will be for people who keep manual records, but once the change to digital is made, they’ll likely be happier in the long run and the information available can support informed decisions about business performance.
“We’re providing advice and support at HB&O to those impacted, including helping to set up the right channels, implement technologies and get people started on the process, with the option for longer term professional advice too if required.”
