Making Tax Digital: A guide for healthcare

What is Making Tax Digital (MTD)? 

MTD is HMRC’s long-term plan to digitise the UK tax system. It requires individuals and businesses to: 

• Keep digital records of income and expenses 

• Submit quarterly updates to HMRC 

• Use MTD-compatible software for all submissions 

This shift aims to reduce errors, improve efficiency, and provide a more accurate picture of tax liabilities throughout the year. 

Who needs to comply? 

From April 2026, the MTD for Income Tax threshold income is £50,000 and MTD will apply to: 

• Self-employed individuals (including GPs, dentists, locum doctors and pharmacists) 

• Landlords 

• Anyone with combined business and/or property income over £50,000 

From April 2027, the threshold drops to turnover of £30,000, and from April 2028, it will reduce further to turnover of £20,000. 

If you operate as a limited company, MTD for Corporation Tax is still in development and not yet mandatory. MTD does not yet cover partnerships, although it is possible that MTD for partnerships will be introduced at some point. 

How is threshold income determined? 

Threshold income is annual turnover. The 2024/25 self-assessment tax returns will be used to determine when self-employed individuals, landlords and businesses need to comply with MTD for Income Tax. Once the 2024/25 tax returns are submitted, if relevant, HMRC will confirm the MTD start date in a letter. 

It’s essential you let your accountant know the start date HMRC impose, and you ensure you’re ready and prepared. 

How does MTD affect VAT registered healthcare professionals? 

MTD for VAT came into force from April 2019 and applies to all VAT registered businesses since April 2022. If you are a VAT registered healthcare professional, VAT registered pharmacy or GP surgery then you should be complying with MTD for VAT. 

How does MTD affect healthcare professionals? 

Pharmacists  

Independent pharmacy owners and locum pharmacists working as sole traders must maintain digital records of all income (e.g. NHS reimbursements, private sales) and expenses. A paper cashbook will no longer be acceptable. If you are using spreadsheets, these must work alongside bridging software. HMRC maintain a list of MTD compliant software, speak to our healthcare experts for more information. 

GPs and doctors 

GPs in partnerships or working independently (e.g. as locums or consultants) must track income received personally from NHS contracts, private work, and any rental income. Partnership income is not used to assess whether the MTD threshold is met. 

Again, digital records must be kept in compliant software, or the use bridging software alongside a spreadsheet will be required. 

Dentists 

Associate dentists and practice owners must report income from NHS and private treatments, lab fees, and other business-related expenses in digital, MTD compliant software 

Benefits of MTD for healthcare providers 

Reduced errors: Automated calculations and digital records reduce the risk of mistakes. 

Real-time insights: Quarterly updates help you understand your tax position throughout the year. 

Improved organisation: Digital tools simplify bookkeeping and tax planning. 

Next steps 

• Check your income threshold to see when MTD applies to you. 

• Speak to your accountant or tax advisor about transitioning to digital tools. 

• Start early to avoid last-minute stress and ensure a smooth transition. 

Want to find out more? Read here… 

For further guidance on MTD, please refer to our MTD guide which is a valuable resource in answering your questions. For healthcare enquiries or to read more from our healthcare experts, visit our healthcare bulletin- repeat prescription.