Updated October 2026
The 2026 UK Small Business Bookkeeping, VAT & MTD Guide
The key bookkeeping, VAT and Making Tax Digital rules for UK sole traders, landlords, partnerships and small limited companies — in one place, written by UK-based bookkeepers.
1. In-house vs outsourced bookkeeping
Our research puts the true annual cost of employing an in-house bookkeeper at £49,240 once salary, employer National Insurance, pension, software, training, holiday cover and management time are included. Most small businesses don't need that capacity.
TIA Bookkeeping charges a fixed monthly fee by business type:
Landlord / Property
from £63 /month + VAT
Sole Trader
from £68 /month + VAT
Partnership / LLP
from £78 /month + VAT
Limited Company
from £88 /month + VAT
Prices exclude VAT and include up to 25 transactions per month. Your exact fixed monthly price depends on your transaction volume — get it in 60 seconds with our online calculator.
Full analysis: The Hidden Cost of DIY Bookkeeping.
2. Making Tax Digital for Income Tax
- 6 April 2026: sole traders and landlords with qualifying income over £50,000.
- 6 April 2027: qualifying income over £30,000.
- Keep digital records in HMRC-recognised software such as Xero, QuickBooks or Sage.
- Send quarterly updates to HMRC, then a final declaration after the tax year ends.
Step-by-step help: MTD for Income Tax Survival Guide and our free MTD & year-end checklist.
3. CIS and the VAT domestic reverse charge
| Subcontractor status | CIS deduction |
|---|---|
| Registered for CIS | 20% |
| Not registered | 30% |
| Gross payment status | 0% |
- Contractors file a monthly CIS return by the 19th of each month.
- Under the VAT domestic reverse charge, the VAT-registered customer accounts for VAT on most construction services, not the supplier.
- Invoices must say the reverse charge applies. It does not apply when you supply end users.
4. Switching bookkeeper mid-year
- Ask your current bookkeeper for a handover and confirm their final period of work.
- Provide reconciled year-to-date figures and any open queries.
- Add your new bookkeeper as a user on your Xero, QuickBooks or Sage account — the records stay yours.
- Authorise your new bookkeeper with HMRC as your agent so they can handle VAT and MTD submissions.
5. Quick answers
When does Making Tax Digital for Income Tax start?
From 6 April 2026 for sole traders and landlords with qualifying income over £50,000, and from 6 April 2027 for those over £30,000. You must keep digital records, send quarterly updates to HMRC through compatible software and submit a final declaration after the tax year.
What are the CIS deduction rates?
Contractors deduct 20% from registered subcontractors, 30% from subcontractors who are not registered, and 0% where the subcontractor holds gross payment status. Monthly CIS returns are due by the 19th of each month.
What is the VAT domestic reverse charge for construction?
For most building and construction services supplied between VAT-registered businesses that report under CIS, the customer accounts for the VAT instead of the supplier. The supplier's invoice must state that the reverse charge applies; it does not apply to supplies to end users.
How do I switch bookkeeper part-way through the year?
Request a handover from your current bookkeeper, provide reconciled year-to-date figures, add your new bookkeeper as a user on your accounting software, and authorise them with HMRC as your agent. Your records stay in your own software throughout.
Is outsourcing cheaper than an in-house bookkeeper?
Usually, for small businesses. Our research puts the true annual cost of an in-house bookkeeper at £49,240 once salary, employer costs, software, training and cover are included. TIA Bookkeeping's fixed monthly fees start from £63 for landlords, £68 for sole traders, £78 for partnerships and £88 for limited companies (plus VAT).
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