Making Tax Digital for Restaurants — The April 2026 Deadline Is Almost Here
If you are a sole trader restaurant, café, or pub owner earning over £50,000, you must file digital quarterly returns from 6 April 2026. Here is everything you need to know — and how we make the switch painless.
Does Making Tax Digital Affect Your Hospitality Business
MTD for Income Tax applies to sole traders and landlords, not limited companies. Here are the two phases and who they catch.
Phase 1
Sole traders and landlords with qualifying income over £50,000. This captures the majority of established restaurant, pub, and café sole traders across London. Approximately 780,000 taxpayers affected nationally.
Phase 2
The income threshold drops to £30,000, bringing significantly more hospitality sole traders into scope. If you are close to the Phase 1 threshold, you should prepare now regardless.
Are you a sole trader?
Limited companies are not affected by MTD for Income Tax
Is your qualifying income over £50,000?
Include all sources: dine-in, takeaway, delivery platforms, catering
Yes to both
You must comply with MTD from 6 April 2026. Start preparing now.
No to either
You may not be affected yet — but check whether Phase 2 (£30,000+) applies from April 2027.
HMRC has begun sending warning letters in early 2026. If you have received one, do not panic — but do not ignore it either. Contact us for a free MTD readiness check.
What You Will Need to Do Differently
MTD replaces the annual self-assessment return with digital records and quarterly updates. Here are the four fundamental changes.
Digital Record-Keeping
Paper records and spreadsheets are no longer acceptable. All income and expenses must be recorded in MTD-compatible software that can submit data directly to HMRC through their API. For restaurants, this means every till reading, supplier invoice, and delivery platform payment must be captured digitally.
MTD-Compatible Software
You must use HMRC-recognised software that connects to their systems. Options include Xero, QuickBooks, and FreeAgent — but the right choice depends on your EPOS setup, number of revenue streams, and VAT complexity. We help you choose and configure the best option for your operation.
Quarterly Updates
Instead of one annual return, you must submit quarterly updates to HMRC within one month of each quarter end. The standard quarters run April–June, July–September, October–December, and January–March. Missing a deadline earns a penalty point under HMRC's new points-based system.
End-of-Period Statement and Final Declaration
After the fourth quarter, you submit an end-of-period statement confirming the annual figures, followed by a final declaration which replaces the traditional self-assessment return. This means six submissions per year instead of one — but your accountant can handle all of them.
Why MTD Is Harder for Restaurants Than Most Businesses
A restaurant is not a freelance consultant with one bank account and a handful of invoices. The complexity of hospitality operations makes MTD compliance genuinely challenging.
Multiple Revenue Streams
Dine-in, takeaway, Deliveroo, Uber Eats, Just Eat, catering, private events — each source must be tracked and reconciled separately within your digital records for accurate quarterly reporting.
Complex VAT on Mixed Supplies
Eat-in food is standard-rated at 20%, cold takeaway food is zero-rated, hot takeaway is standard-rated. Getting this right in digital records every day is a challenge unique to hospitality. See our hospitality VAT guide for more detail.
EPOS Integration Gaps
Many restaurant EPOS systems were not designed to connect with MTD-compatible accounting software. Older or bespoke till systems may require middleware, manual exports, or replacement to meet the digital record-keeping standard.
Tips and Tronc in Digital Records
If you operate a tronc scheme, tip data must also be accurately reflected in your digital records. The interaction between tronc payroll and MTD quarterly reporting adds another layer of complexity that needs proper configuration.
Daily Cash Handling
Restaurants handle cash daily. Every cash receipt must be recorded digitally — you can no longer rely on end-of-week cash reconciliations or manual till summaries. Real-time digital recording is now the standard.
Seasonal Fluctuations
Quarterly reporting captures seasonal peaks and troughs that an annual return smooths over. Understanding how this affects your cash flow and tax position each quarter requires careful planning — particularly around busy festive periods and quieter months.
Your Step-by-Step MTD Preparation Plan
Work through this checklist to ensure your hospitality business is fully MTD-ready before the April 2026 deadline.
Confirm Your Income Threshold
Add up all qualifying income — dine-in, takeaway, delivery platforms, catering. If it exceeds £50,000, you are in scope for Phase 1 from April 2026.
Choose MTD-Compatible Software
Select from HMRC-recognised options — Xero, QuickBooks, or FreeAgent are most common. The best choice depends on your EPOS system, number of revenue streams, and VAT complexity. We recommend based on your specific setup.
Connect Your EPOS System
Integrate your till system with your accounting software so sales data flows automatically. If your EPOS does not support direct integration, we identify the most efficient workaround.
Set Up Digital Records for All Revenue Streams
Every income source — from Deliveroo commissions to cash tips — must be captured digitally within your MTD software. No more paper records or spreadsheet summaries.
Establish Your Quarterly Reporting Calendar
Know your quarter-end dates and submission deadlines. Build them into your business calendar now so you are never caught off guard by a filing date.
Run a Dry-Run Quarter
Test the entire process before it goes live. Record a quarter of data digitally and prepare a practice submission to identify any gaps or issues in your workflow before the real deadline.
Authorise Your Accountant to File on Your Behalf
You do not have to submit MTD returns yourself. Authorise LOYALS as your agent and we handle all quarterly updates, end-of-period statements, and final declarations for you.
We Handle Your MTD Transition From Start to Finish
From choosing the right software through to filing every quarterly update, we make Making Tax Digital completely painless for your hospitality business.
Software Selection and Setup
We assess your operation and recommend the MTD software that best fits your needs, then configure it fully — chart of accounts, VAT codes, revenue categories, and bank feeds all tailored to hospitality.
EPOS Integration
We connect your existing EPOS system to your accounting software so daily sales data flows automatically. Where direct integration is not available, we build the most efficient bridge.
Data Migration
Moving from paper records, spreadsheets, or non-compatible software? We migrate your historical data cleanly into the new system so you start with a complete picture.
Quarterly Filing Management
We prepare and submit every quarterly update, end-of-period statement, and final declaration on your behalf. You never miss a deadline and never interact with HMRC's systems directly.
Ongoing Compliance Monitoring
MTD rules evolve. We monitor regulatory changes and ensure your setup stays compliant as thresholds change, software updates, and HMRC requirements develop over time.
WhatsApp Support
Need to record an expense? Snap a photo of the receipt and WhatsApp it to us — we handle the rest. Real-time support that fits around your operating hours, not ours.
We Do Not Just Set Up the Software and Leave
We manage your quarterly filings so you never miss a deadline. Unlike firms that configure your software and walk away, we stay alongside your business every quarter, every filing, every year.
Trusted by Hospitality Businesses Across London
"LOYALS handled our entire transition to digital accounting. They connected our EPOS to Xero, migrated all our records, and now file our quarterly returns for us. We literally do not have to think about MTD at all."
"I was dreading the switch to digital. LOYALS made it straightforward — they set everything up, showed my staff how to photograph receipts for WhatsApp, and now the whole thing runs smoothly. Wish I had done it sooner."
"The best part is not just the technology — it is the availability. I messaged them on a Sunday evening about a VAT question and had an answer within an hour. That responsiveness is what keeps me with LOYALS."
Do Not Wait Until April — Get MTD-Ready Now
The deadline is fixed and HMRC will not offer extensions. Every week you wait is a week less to prepare. Book your free MTD readiness assessment today.
Available evenings and weekends — because HMRC deadlines do not wait for office hours.
Your Making Tax Digital Questions Answered
MTD for Income Tax Self Assessment starts on 6 April 2026 for sole traders and landlords with qualifying income over £50,000. A second phase on 6 April 2027 lowers the threshold to £30,000. If you operate a restaurant, café, pub, or bar as a sole trader and your income exceeds the relevant threshold, you must begin keeping digital records and filing quarterly updates from your start date.
No. MTD for Income Tax applies only to sole traders and landlords. If your restaurant operates as a limited company, you are not affected by MTD ITSA. However, VAT-registered limited companies should already be complying with MTD for VAT, which has been mandatory since April 2022. If you are currently a sole trader and considering incorporation, this may be worth discussing as part of your tax planning — we can advise on the implications.
HMRC maintains an official list of MTD-compatible software. For hospitality businesses, the most commonly recommended options are Xero, QuickBooks, and FreeAgent. The best choice for your operation depends on your EPOS system compatibility, the number of revenue streams you manage, your VAT complexity (particularly mixed-supply rates for eat-in versus takeaway), and whether you need multi-user access. We assess your setup and recommend the software that fits best.
Many modern EPOS systems — including Square, Lightspeed, Clover, and iZettle — offer direct integrations with Xero or QuickBooks through APIs or built-in connectors. Older, bespoke, or less common EPOS systems may require middleware solutions or regular manual exports. We assess your specific EPOS setup as part of our MTD readiness review and find the most efficient path to integration, even if your current system was not designed with MTD in mind.
HMRC operates a points-based penalty system for late MTD submissions. Each late quarterly update earns a penalty point. Once you reach the threshold — 4 points for quarterly filing obligations — you receive a £200 penalty for each subsequent late submission. Points expire after a period of compliant behaviour but accumulate quickly if you miss multiple deadlines. There are also separate penalties for late payment of any tax that is due. The simplest way to avoid any penalties is to be set up and running before the deadline arrives.
Under MTD for Income Tax, you submit quarterly updates to HMRC within one month of each quarter end — the standard quarters run April to June, July to September, October to December, and January to March. After the fourth quarter, you submit an end-of-period statement confirming the annual figures, followed by a final declaration which replaces the traditional self-assessment return. That is six submissions per year in total, but your accountant can handle all of them on your behalf.
Yes, absolutely. You can authorise your accountant as your agent to submit all MTD filings on your behalf — quarterly updates, end-of-period statements, and final declarations. At LOYALS, we manage the entire quarterly filing process for our hospitality clients. You keep your records up to date and we handle every submission. You never need to log into HMRC's system or worry about filing dates.
The additional cost depends on your current setup. If you are already using cloud accounting software and keeping good digital records, the incremental cost may be modest. If you are transitioning from paper records or spreadsheets, there will be software subscription costs (typically £10–35/month) and initial setup time. We offer a free MTD readiness assessment where we identify exactly what you need and provide transparent pricing. Many clients find that the improved financial visibility from real-time digital records actually helps them make better business decisions and improve profitability.
Yes. All qualifying income counts toward the MTD threshold. This includes revenue from Deliveroo, Uber Eats, Just Eat, and any other delivery platforms, alongside your dine-in, takeaway, and catering income. If your combined income from all sources exceeds £50,000, you are within scope for MTD from April 2026. Proper tracking of delivery platform revenue across multiple sources is essential for determining your threshold position accurately.
Under MTD, all business income and expenses must be maintained in digital format within MTD-compatible software. For restaurants, this includes daily sales data from your EPOS or till, delivery platform income and commissions, cash takings, all purchase invoices and supplier payments, staff costs and payroll data, rent, utilities, and other overheads. You can no longer maintain these records in spreadsheets or paper files — they must be in software that can submit data directly to HMRC through their API.