From April 2026, the UK government’s Making Tax Digital (MTD) for Income Tax Self Assessment (ITSA) scheme will bring big changes for self-employed gardeners and small gardening businesses. Under these new digital tax rules, those earning over £50,000 annually will be required to maintain digital financial records and submit tax updates to HMRC every three months. From April 2027, the threshold lowers to £30,000, affecting even more self-employed gardeners.
Will You Have to Pay Tax Every Quarter?
Despite the new requirement to submit quarterly updates, gardeners will not have to pay tax every quarter—at least for now. Instead, tax payments will continue to be due once a year by 31st January. However, there is speculation that quarterly payments could be introduced in the future.
What Gardeners Need to Do
To comply with MTD, self-employed gardeners must:
- Use MTD-compatible accounting software to keep digital records.
- Submit quarterly updates to HMRC.
- File a final End of Period Statement (EOPS) and tax declaration by 31st January each year.
Which Software Will You Need?
HMRC requires MTD-compliant software to be used for digital tax submissions. Some popular options include:
- QuickBooks – From £12 per month
- Xero – From £15 per month
- FreeAgent (free for some business banking customers)
- Sage Accounting – From £14 per month
These programs allow you to track income, expenses, and submit tax returns directly to HMRC.
What About Limited Companies?
If you run a gardening business as a limited company and already use an accountant, you may not need to make any major changes. However, MTD means accountants may require quarterly financial updates, rather than receiving all your receipts and invoices once a year. Some firms may also charge extra for managing digital tax submissions.
For limited companies, Making Tax Digital (MTD) currently applies only to VAT-registered businesses. However, MTD for Corporation Tax is expected to be introduced, but not until at least 2027.
Current Rules for Limited Companies:
✅ If your company is VAT-registered, you already need to use MTD-compliant software for VAT returns.
✅ Corporation Tax is not yet included in MTD, so you can still submit annual accounts and tax returns as usual.
✅ Your accountant can continue filing your Corporation Tax return, but once MTD for Corporation Tax is introduced, you may need to provide quarterly financial updates.
Will Limited Companies Need to Submit Quarterly Tax Returns?
Not yet! But when MTD for Corporation Tax arrives (expected after 2027), limited companies will likely have to submit quarterly digital updates instead of just an annual return.
Penalties for Non-Compliance
Failure to comply with MTD can result in penalties:
- Late Submissions – A points-based system applies, with fines of £200 after multiple missed deadlines.
- Late Payments – If tax is unpaid for 16-30 days, a 2% penalty applies, increasing over time.
- Non-Compliance – Using non-MTD software for VAT or income tax reporting can result in fines of up to £400 per return.
How to Prepare
Gardeners should start preparing by:
- Checking if their income falls under the MTD rules.
- Choosing MTD-compliant software.
- Adjusting bookkeeping habits to keep records up to date.
- Speaking to an accountant to discuss their best approach.
As the deadline approaches, it’s crucial for gardeners to get ready for this major shift in tax reporting to avoid unnecessary stress and penalties. Start digitalising your records now to stay ahead of the changes!
