Making Tax Digital for Income Tax Self Assessment is getting closer, and it will change how many yoga teachers keep records and report to HMRC. Here is a clear, practical guide drawn from the episode notes and conversation with Jessica Garbett of Yogi Tax.
What is Making Tax Digital, in plain English
Two core shifts:
- Digital record-keeping: you must keep your books digitally, either in a spreadsheet that can connect to HMRC using “bridging” software, or in bookkeeping software.
- Quarterly submissions: you must send a simple quarterly data upload to HMRC directly from software. This is a snapshot, not a full tax return.
Payment dates do not change. You still settle your bill by 31 January, with a 31 July payment on account when applicable.
Who is affected (and who is not)
MTD for VAT has existed since 2019, but this new phase targets individuals with:
- Self-employment income (e.g., teaching classes, workshops, retreats, trainings), and or
- Property rental income.
It does not apply to limited companies for this phase. However, if you run a limited company and also have separate self-employment or rental income as an individual, your individual income can bring you into scope.
Thresholds and timelines you need to map now
MTD entry is triggered by combined gross turnover from self-employment plus property rents (before expenses):
- From April 2026: threshold £50,000, assessed on your 2024 to 2025 figures.
- From April 2027: threshold £30,000, assessed on your 2025 to 2026 figures.
- From April 2028: threshold £20,000.
Once in, to fall back out you need three consecutive years below the prevailing threshold, which in practice will mean three years below £20,000 as thresholds reduce.
Quarterly cadence: what actually happens
- First MTD quarter runs 6 April to 5 July.
- You then submit your software snapshot around mid-July.
- Repeat each quarter.
- Your annual self-assessment and payment timetable remain as now.
Spreadsheets, software, and bank feeds
You can:
- Stay with spreadsheets but you’ll need bridging software to connect to HMRC.
- Use bookkeeping software. Many teachers like FreeAgent for the right mix of features and price. It connects to most bank accounts. Customers of NatWest Group banks (Metal, NatWest, RBS) can often access FreeAgent at no additional cost.
- Some banks may offer their own tools; approach free or ultra-simple options cautiously. HMRC will not provide its own bookkeeping or bridging software.
If you are likely to cross £50,000, start setting up now and practise a few months so your first July submission is smooth.
Retreats, deposits, and timing of income
HMRC increasingly defaults to cash accounting for small businesses: you recognise income when you receive it.
- For long-lead retreats with deposits and staged payments, that means recognising income as cash lands.
- If a one-off retreat creates a mismatch of income and expenses across tax years, accruals accounting can be used to match them, but most teachers will remain on cash accounting for regular annual programmes.
Penalties and common pitfalls
A new points-based regime will penalise repeated missed or very late quarterly submissions. Minor bookkeeping errors are typically corrected in the next quarter; the real risk is not filing or filing very late.
Expect a brown-envelope notice around February before your start date, but that leaves little time. Map your threshold and prepare earlier.
Why HMRC is doing this
The quarterly data may not be actively used at first, but the wider aim is to standardise digital records, improve data quality, and shift processing from HMRC to taxpayers, reducing the “shoebox of receipts” era and discouraging the informal cash economy.
A simple action plan
- Check your turnover now: add up gross self-employed income plus any rents to see which start date you’re heading toward.
- Choose your tool: spreadsheet plus bridging, or software such as FreeAgent. Confirm bank-feed compatibility.
- Begin early: practise the workflow before your first mandated quarter.
- Set quarterly habits: reconcile bank, capture receipts, review income timing for retreats, and submit on time.
- Stay educated: guidance in the media can be patchy; get clear, sector-specific updates.
For sector-savvy updates and support tailored to yoga teachers, visit Yogi Tax and subscribe to their newsletter.
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