What MTD means for your business in 2026
Making Tax Digital for Income Tax Self-Assessment (MTD for ITSA) goes live on 6 April 2026. If you're self-employed or a landlord with gross income over £50,000, you're in the first wave.
The key change: instead of one annual self-assessment tax return, you'll submit quarterly summaries of income and expenses to HMRC using MTD-compatible software. Paper records and spreadsheets are out. Digital record-keeping is mandatory.
The threshold drops to £30,000 from April 2027 and £20,000 from April 2028. Eventually, most self-employed people and landlords will be covered.
Why credit cards make MTD easier
Here's the thing: business credit cards create automatic digital records of every transaction. Date, amount, merchant, category — all captured digitally, in real time.
If you're currently paying for things by bank transfer or cash and manually recording them, a credit card that integrates with accounting software eliminates most of the work. Every transaction flows into Xero, QuickBooks, or FreeAgent automatically. Bank reconciliation happens in clicks, not hours.
This matters under MTD because HMRC wants digital records maintained throughout the year, not reconstructed at year-end from a box of receipts.
Automatic categorisation
Most accounting integrations learn from your spending patterns. After a few months:
- Supplier payments get categorised automatically
- Recurring expenses are matched to the right account codes
- VAT on purchases is captured for your return
- Receipt matching links card transactions to uploaded receipts
For sole traders who hate bookkeeping (that's most of them), this turns a dreaded chore into something that mostly runs itself.
Cards with the best accounting integrations
Not all cards integrate equally well. Here's what connects to what:
| Card | Xero | QuickBooks | FreeAgent | Sage | |------|------|------------|-----------|------| | Capital on Tap | Direct feed | Direct feed | No | No | | Funding Circle | Direct feed | No | Direct feed | Direct feed | | Amex Business cards | Direct feed | Direct feed | No | No | | Barclaycard | Bank feed | Bank feed | Bank feed | Bank feed |
"Direct feed" means the card provider pushes transactions to the accounting software automatically. "Bank feed" means you set up the connection through the accounting software — works fine but can occasionally disconnect.
If you use Xero: Capital on Tap, Funding Circle, or Amex all integrate directly.
If you use FreeAgent: Funding Circle is the best choice — it has a native FreeAgent integration plus Sage support.
If you use QuickBooks: Capital on Tap or Amex connect directly.
Why this matters for sole traders
Sole traders are most affected by MTD because:
- Many currently use spreadsheets or paper records (no longer allowed)
- They typically don't have an accountant doing quarterly bookkeeping
- They need affordable, low-effort solutions
A business credit card with accounting integration is the lowest-effort path to MTD compliance. Put all business expenses on the card, let the integration feed transactions to your MTD-compatible software, and your quarterly submissions are mostly automated.
The quarterly reporting cycle
Under MTD, you'll submit updates to HMRC quarterly:
- Q1: 6 April – 5 July (due by 7 August)
- Q2: 6 July – 5 October (due by 7 November)
- Q3: 6 October – 5 January (due by 7 February)
- Q4: 6 January – 5 April (due by 7 May)
- Final declaration: Due by 31 January following the tax year end
If all your business spend flows through a credit card with accounting integration, each quarterly update is a matter of reviewing auto-categorised transactions and clicking submit. The alternative — manually entering every expense from bank statements — is exactly the kind of pain MTD is designed to eliminate (ironically by creating more frequent deadlines).
Getting started
If you're in scope for MTD from April 2026:
- Get MTD-compatible software — Xero, QuickBooks, or FreeAgent are the most popular choices
- Get a business credit card that integrates — Capital on Tap for Xero/QuickBooks, Funding Circle for FreeAgent/Sage
- Route all business expenses through the card — the more spend on the card, the less manual entry you do
- Use bill pay for bank-transfer expenses — rent, supplier invoices, and HMRC payments can go on the card too (see our bill pay guide)
- Review and submit quarterly — your accounting software will handle the HMRC submission
MTD doesn't have to be painful. The right card and software combination turns it into something you spend 30 minutes on per quarter instead of 3 hours.