Someone recently asked a question in the Facebook group about Making Tax Digital and what it means for B&B owners. I thought I’d do the sensible thing and check the official government website. A few paragraphs in and I'd had enough!

So I thought I'd write a blog post that simplifies it a bit – not as a financial expert (because I’m absolutely not), but as a small business owner trying to work out what I actually need to do next.

⚠️ Please note: This blog is specifically for UK-based B&B owners. If you’re running a bed and breakfast in another country, the tax rules where you are may be completely different – so it’s best to check with your own local tax authority.

Disclaimer: This blog is for general information only and should not be taken as tax or financial advice. I’m not an accountant or tax advisor, and while I’ve done my best to make sure everything is correct at the time of writing, I can’t guarantee the accuracy.

You should always do your own research or speak to your accountant or bookkeeper. This post was created with the help of AI (ChatGPT) and based on information from official UK government sources.
For the most up-to-date guidance, visit: Making Tax Digital – GOV.UK

Does Making Tax Digital apply to you?

If you're a UK-based sole trader running a B&B and your total income from self-employment (including B&B income) and property is:

• Over £50,000 – you'll need to comply with MTD rules from April 2026
• Between £30,000 and £50,000 – MTD applies from April 2027
• Under £30,000 – you don’t need to follow the new rules yet, but this could change in the future.

This is your total income before expenses, not your profit – so it’s important to check what your full income adds up to.

What do you actually need to do?

If MTD does apply to you, here’s what that means in real terms:

1. Keep digital records of your income and expenses (no more paper notebooks or spreadsheets)
2. Use HMRC-approved software to:
   • Send updates to HMRC every quarter
   • Submit a final year-end declaration

That’s it. No more last-minute tax return panic in January – at least, that’s the idea.

Not sure where to start? Here’s a quick checklist:

• Check your income – if you think you’ll hit or go over £30,000, it’s time to start preparing for MTD. Remember, this is your total income before expenses, not your profit.
• If you’re already using software, make sure it’s MTD-compliant. You can search for approved software on the HMRC website.
• Speak to your accountant or bookkeeper – ask what they recommend and whether they require you to use specific software.
• See if they have any MTD training or guidance resources to help you get started.
• If you're not using any software yet, start exploring your options now – and consider trying one out from the new tax year, which starts on 6 April 2025, so you can get used to it before it becomes a requirement.
  

Choosing the right software

There are lots of different accounting software options out there – and it can feel a bit overwhelming trying to decide which one to go for.

I know you might well prefer me to tell you exactly which software to use, but I haven’t personally used any of the software options – I’m a bit of a spreadsheet addict myself (which has worked fine...up to now!). I'm currently veering towards QuickBooks because of its affordability for a very small business.

If you’re just starting to look into it, here are a few things to think about:

• Is it listed as MTD-compatible? HMRC has a full list of approved software here:
  👉 Find MTD-compatible software – GOV.UK

• Is it B&B appropriate? Some software is better suited to service-based businesses like B&Bs, where you’re not managing stock or complex invoicing.

• How easy is it to use? Some platforms are designed for beginners, while others assume a bit of accounting knowledge.

• Does it feel like overkill for a small business? Avoid systems with loads of features you’ll never use – it could just make things more confusing.

• Do you want to use it on your phone or tablet? A mobile app can be handy for tracking income, logging expenses, or snapping receipts on the go.

• Does it work with your bank account? Look for software that links to your bank to pull in transactions automatically.

• Do you work with an accountant or bookkeeper? Ask if they recommend or require a particular system – and whether they offer any help getting started.

• What’s the cost? Some options are free, some come with bank accounts, and others charge monthly – make sure it suits your budget and needs.

• Can you try it first? Most systems offer free trials, so it’s worth testing one or two before committing.

If you're already using software, it’s also worth double-checking whether it’s officially MTD-compatible – just because it does bookkeeping doesn’t mean it can submit your quarterly updates to HMRC.

What should you be doing now?

If you’re running a B&B in the UK, or thinking about starting one, it’s a good idea to start looking into Making Tax Digital – especially if your income is getting close to the £30,000 mark.

Take some time to explore the different software options, speak to your accountant or bookkeeper if you have one, and think about starting to use MTD-compatible software from the new tax year on 6 April 2025. That way, you’ll have time to get comfortable with it before the rules come in.

HMRC will also be offering support in the form of webinars, videos and written guidance to help you understand what’s involved – so you won’t be left to figure it out on your own.