You know that Making Tax Digital is coming. You probably know it means quarterly submissions instead of one annual tax return. But you might be wondering — why is HMRC doing this in the first place?
It's a fair question, especially when the current system seems to work well enough. So let's look at what's actually driving this change.
The tax gap problem
At the heart of MTD is a simple problem: HMRC loses billions every year to errors in tax returns. Not fraud — genuine mistakes. Transposed figures, forgotten income, misclassified expenses.
HMRC's own estimates put the cost of avoidable errors at around £8.5 billion per year. That's not a rounding error. It's a significant chunk of public revenue disappearing because the current system makes it too easy to get things wrong.
The annual Self Assessment return asks you to remember twelve months of income and expenses in one go — often months after the tax year has ended. If you're a locum doctor juggling shifts across multiple hospitals, keeping track of everything over a full year is genuinely difficult.
More frequent reporting, fewer mistakes
The logic behind quarterly submissions is straightforward. If you report your income and expenses four times a year instead of once, each update covers a smaller window. There's less to remember, less to reconstruct, and less room for error.
Think of it this way — it's easier to recall what you earned and spent over the last three months than over the last twelve. Especially when you're working irregular shifts across different trusts.
HMRC also believes that quarterly reporting gives taxpayers a clearer picture of their tax position throughout the year. No more nasty surprises in January when the bill arrives.
Digital records, not paper trails
The other piece of the puzzle is digital record-keeping. Under MTD, you can't just keep a shoebox of receipts and hand them to your accountant once a year. Your records need to be maintained digitally — either in compatible software or a spreadsheet linked to software that can submit to HMRC.
This isn't about making your life harder. It's about creating an audit trail that reduces transcription errors and makes it easier to spot inconsistencies before they become problems.
It's been a long time coming
MTD isn't a new idea. The government first announced its vision for a digital tax system back in 2015, with the original target of rolling it out by 2018. That proved too ambitious. After consultations, pushback from small businesses, and a general election, the scope was narrowed.
VAT went first — MTD for VAT launched in April 2019 for larger businesses and was extended to all VAT-registered businesses by April 2022. Income tax has been delayed multiple times, but the current timeline is now set:
- April 2026 — self-employed income over £50,000
- April 2027 — self-employed income over £30,000
- April 2028 — self-employed income over £20,000
What this means for you
If you're a self-employed healthcare professional — locum doctor, dentist, pharmacist, or other allied health worker — earning above the threshold, this change is happening whether you like it or not.
The good news is that the reasoning behind it isn't unreasonable. More regular reporting should mean fewer year-end surprises and a clearer view of what you owe throughout the year. The key is finding software that handles the compliance without adding to your admin burden.
That's exactly why Duly Filed exists — to make quarterly submissions as painless as possible for healthcare professionals who'd rather spend their time on patients than paperwork.
Duly Filed is built specifically for self-employed healthcare professionals who want to stay MTD-compliant without the complexity. Learn more.