Making Tax Digital for locum vets

Who is in, and which year decides it

Making Tax Digital for Income Tax is being introduced in three tranches, each with its own threshold and each tested on a specific tax year.

The mechanism is worth understanding because it removes the guesswork. HMRC checks the Self Assessment return for the relevant year, and the previous year's return determines the obligation. So your 2024/25 return, filed in the ordinary way, is what put you into the first tranche from 6 April 2026 — a return you had already submitted before the obligation started. Approximately 780,000 individuals are in that first tranche.

Qualifying income is your turnover, not your profit

This is the single most misunderstood part of the regime, and for a locum vet it is the part that decides whether you are in or out. Qualifying income is gross income from self-employment and property, before allowances or expenses. Your fees, not what you keep.

Worked example — illustrative. Three locum vets and their 2024/25 figures:

• Locum A invoiced £68,000 of fees and had £14,000 of expenses, so a profit of £54,000. Qualifying income is £68,000. Over £50,000, so in from 6 April 2026.
• Locum B invoiced £46,000 of fees and also lets one property producing £9,000 of gross rent. Neither source exceeds £50,000, but qualifying income combines self-employment and property: £55,000. Also in from 6 April 2026.
• Locum C invoiced £34,000. Below £50,000, so outside the first tranche. If 2025/26 fees again exceed £30,000, the obligation starts 6 April 2027. A locum invoicing around £22,000 is tested on 2026/27 against the £20,000 threshold and comes in from 6 April 2028.

Locum B is the case that catches people. A vet who does not think of themselves as a high earner, because their profit after mileage, indemnity, RCVS fees and professional development is modest, can be well inside the regime on gross figures — and adding a single let property can put them there without either activity being large.

The quarterly updates, and the cumulative rule

Four updates a year, with fixed deadlines:

Read the left-hand column again. Every period starts on 6 April. These are not four discrete quarters — they are cumulative periods, each one running from the start of the tax year to the end of the quarter concerned. The second update covers six months, the third covers nine, and the fourth covers the whole year.

Worked example — illustrative. A locum with fees of £17,000 and expenses of £4,000 in the first quarter, then £16,000 of fees and £3,500 of expenses in the second:

• The update due 7 August reports £17,000 and £4,000.
• The update due 7 November reports £33,000 and £7,500 — the running totals from 6 April, not the £16,000 and £3,500 of the second quarter alone.

The practical benefit of a cumulative design is that a mistake corrects itself: if you missed an invoice in the first quarter, including it in the second update fixes the figures without a separate amendment. The practical risk is double counting, which is what happens when someone treats a cumulative period as a discrete one and adds it to the previous total.

An update may be sent at any time from the end of the period up to the deadline, and up to 10 days early where no further transactions are expected in the period. For a locum who invoices monthly and has nothing outstanding, that early window is genuinely useful.

What actually changes in how you keep records

The obligation is to keep digital records and submit through compatible software. For most locums that is a smaller change than the name suggests, but it is a real one.

• Timing becomes the constraint. A shoebox reconciled each January does not survive a 7 August deadline. Income and expenses have to be captured close to when they happen.
• Categories have to be consistent. Quarterly totals are submitted by category, so mileage, professional fees, indemnity insurance, equipment and continuing professional development need to land in the same place every time.
• Property is reported separately. If a let property is part of what put you over the threshold, it is a separate income source with its own updates.
• Records need to exist at the quarter end, not by the deadline. The month between the period end and the deadline is for review, not for reconstruction.

What does not change

Quite a lot, and it is worth being explicit because the regime is often described as though the whole tax system had been rebuilt.

• The tax year is the same. 6 April to 5 April.
• The figures your tax is calculated on are the same. A quarterly update is a summary of totals, not a tax calculation, and it does not fix your liability.
• Your payment dates are not moved by MTD. Quarterly updates are a reporting obligation, not a payment schedule, and nothing about the regime requires you to pay tax four times a year.
• Your year-end position is still declared, with accounting adjustments, capital allowances and reliefs dealt with then rather than in a quarterly update. Claiming the Annual Investment Allowance on a new ultrasound scanner, for instance, is a year-end matter — see our capital allowances guide.
• What is deductible has not changed. MTD is about how figures reach HMRC, not about which expenses count.

Exemptions, and the company point

Exemptions exist. The clearest is digital exclusion — where it is not reasonably practicable for someone to use digital tools, for reasons of age, disability, location or religion. HMRC operates an application process for exemption, and it is a formal application rather than a self-assessment of one's own preferences. If you think you may qualify, apply rather than assume.

A limited company locum is not in scope at all. Making Tax Digital for Income Tax applies to sole traders and landlords. Companies are outside it, so a locum operating through their own company has no quarterly update obligation in respect of the company's trade. That is a genuine planning consideration and it belongs on the list of differences between operating as a sole trader and through a company — alongside corporation tax, the dividend rates that rose on 6 April 2026, the associated companies divisor and the employer National Insurance position.

It is not, on its own, a reason to incorporate, and it should never be presented as one. The quarterly update obligation is administrative; the tax consequences of incorporating are structural and, on 2026/27 rates, frequently unfavourable for someone who draws everything they earn. Our incorporation guide works that comparison through in pounds. If you are already trading through a company for reasons that stack up, being outside MTD is a by-product rather than the point.

What to do about it now

• Work out your gross figure, not your profit, for the year that tests you — and add any property income to it.
• If you are already in, the deadlines to diarise are 7 August, 7 November, 7 February and 7 May, and the second and later updates are cumulative from 6 April.
• If you come in on 6 April 2027 or 6 April 2028, get the record-keeping habit established a year early. The regime is far less painful for someone already recording weekly.
• Decide who is submitting. The obligation is yours whether an agent files or you do, and it is worth agreeing which of you is watching the deadline.
• Check your software genuinely is compatible, rather than merely digital. A spreadsheet is not automatically compliant.

Locum tax has more moving parts than the quarterly updates — the status question, expenses, and whether a company makes sense at all. Our locum vet accounts service covers the lot, and the first conversation is free.