Making Tax Digital for after-school clubs: what's changing in April 2026

TL;DR: Making Tax Digital for Income Tax (MTD ITSA) hits self-employed UK after-school club operators in three waves, based on qualifying income from self-employment and/or property: over £50,000 from 6 April 2026, over £30,000 from 6 April 2027, over £20,000 from 6 April 2028. Three things change for your business: digital records that must be created by the relevant update deadline (paper or unstructured records can still be kept, but are not enough on their own), four quarterly updates per tax year (plus a Self Assessment tax return using compatible software), and compatible software to send the quarterly updates and submit the tax return. The time required varies with transaction volume, record quality and the software you use; the continuing duty is to keep accurate digital records and check the software-generated update. The shift is the rhythm: from a once-a-year January scramble to a four-times-a-year discipline. Limited-company clubs file Corporation Tax instead and aren't covered by ITSA MTD.

Current HMRC rule: Each update is calculated by compatible software from digital records and covers cumulative category totals from the start of the tax year to the end of the update period - not only the previous three months. If record keeping and filing use different software, keep a permitted digital link between them; manual re-keying or clipboard transfer is not a digital link. HMRC will not apply penalty points for late quarterly updates in 2026/27, but the updates must still be sent before you submit your Self Assessment tax return using compatible software. Check HMRC digital-record guidance, quarterly-update guidance and HMRC's current MTD journey.

If you run a UK after-school or holiday club as a sole trader, the headline news is short. MTD ITSA becomes mandatory in three steps, based on qualifying income from self-employment and/or property:

• From 6 April 2026 — qualifying income over £50,000.
• From 6 April 2027 — qualifying income over £30,000.
• From 6 April 2028 — qualifying income over £20,000.

That will catch many established sole-trader club operators, especially those running term-time + full-week holiday programmes across multiple schools or sites. If you also rent out a property, that rental income counts toward the same threshold. If your club is set up as a limited company, you file Corporation Tax — ITSA MTD doesn't apply to you, though digital record-keeping is still good practice.

The three real changes:

1. Digital records are required. Create and keep the required income and expense records in a structured digital format by the relevant update deadline. A spreadsheet can work when compatible software preserves the required digital links and can send the quarterly updates and tax return. Some cloud accounting software can handle both record keeping and filing; check HMRC's current compatible-software list and the provider's supported features. Paper or unstructured records can still be kept, but they are not enough on their own once MTD applies; the required records must also be created and kept digitally by the relevant deadline.
2. Four quarterly updates per tax year, plus your Self Assessment tax return using compatible software. Each update contains cumulative totals for the categories you use, from the start of the tax year to the update-period end. You make the relevant adjustments and complete the tax calculation when you prepare and submit your Self Assessment tax return using compatible software.
3. compatible software for the quarterly updates. MTD for Income Tax updates and the tax return must be sent through compatible software. You need either a cloud accounting tool that handles the submission natively, or a spreadsheet paired with compatible bridging software that supports the workbook and a permitted digital link.

Three changes. The rest is operational discipline.

Worth saying plainly: MTD does not change the underlying tax rules. A quarterly update can produce an estimate, but it is not a final tax calculation: adjustments and the final liability are dealt with through the tax return.

Review your existing workflow against HMRC's digital-record and compatible-software requirements. Keep useful invoicing, expense and mileage habits, then close any gap in structured digital records and permitted digital links.

The clubs that'll find this hardest are the ones currently running on a paper register and a January reconciliation. That annual-only approach is not enough once MTD applies because the required digital records must exist by each update deadline. Your accountant cannot submit a quarterly update if you've handed them nothing for the quarter.

Practical move for the next 30 days: get every business transaction running through a separate business bank account. Set a 15-minute weekly admin slot (Friday evening works for most clubs, after the last child has gone home and the cleaning is done) to log fees, snack-and-craft costs, hall hire, staff wages if applicable, and mileage against the right categories. That single habit takes you most of the way.

A quarterly update is not a tax return. It contains cumulative category totals from the start of the tax year to the update-period end. For an after-school or holiday club, useful internal tracking categories include the following; your filing software should map them to the HMRC fields required for your income source and turnover:

Cumulative income to this update-period end: weekly term-time fees per child, per-day or full-week holiday club fees, holiday-club early-bird discounts, late-collection charges, sibling rates, and any add-ons like school-uniform-day care or in-service-day cover.

Total expenses by category: hall hire or premises rent, utilities (where you pay them separately), snacks and refreshments, craft and activity supplies, equipment (sports gear, tablets, board games), staff wages and PAYE if you have employees (or contractor fees if you use freelancers), staff DBS renewals, paediatric first aid CPD, safeguarding training, professional memberships (Out of School Alliance, equivalent), insurance (public liability, employer's liability, professional indemnity), accountant or bookkeeper, software (booking apps, parent-comms platforms), phone, marketing, and use-of-home for admin.

You don't reconcile each line at the quarterly stage. Your software sends cumulative category totals from the start of the tax year to the update-period end. You make the relevant adjustments and complete the tax calculation when you prepare and submit your Self Assessment tax return using compatible software.

When your records are current, compatible software can calculate the update for you to check. Each update is cumulative from the start of the tax year to the end of the update period. If record keeping and filing use different software, transfer the records through a permitted digital link such as linked cells, CSV import/export or an API; manual re-keying or clipboard transfer is not a digital link.

If you employ any staff (a play leader, a club assistant, a holiday-club seasonal hire), you're already in PAYE territory and that has its own digital reporting requirements (RTI submissions to HMRC for every payroll run). PAYE is separate from ITSA MTD; both apply if you employ.

Casual or self-employed contractors who invoice you for sessions are accounted for as expenses on your books, with the contractor handling their own self-assessment. Make sure the contractor relationship is genuinely self-employed and documented as such — HMRC challenges clubs that pay regular weekly "contractors" who look more like employees in practice.

Staff costs are often the largest single expense category for clubs with employees. Tracking them quarterly under MTD just means consistent payroll discipline, which you already need for RTI anyway.

There are three legitimate routes. Each has a real fit and a real cost. Pick once, commit, and stop second-guessing.

Cloud accounting software. Prices and features change. Check HMRC's compatible-software list and confirm the provider's current support for MTD Income Tax, bank feeds, invoicing and any payroll or CIS features you need. Most include payroll modules at a small extra cost, which suits clubs with employed staff. Best fit: clubs with employees, multi-site operations, or higher turnover.

Spreadsheet plus bridging software. The spreadsheet is your record of income and expenses; compatible bridging software that supports the workbook and a permitted digital link reads the spreadsheet and submits to HMRC in the format MTD requires. Best fit: solo-operator term-time-only clubs with simple finances and no employees.

Hand it to your accountant. They handle the quarterly updates on your behalf. Costs more than DIY, but if your accountant already does your year-end (and your PAYE if you employ), the marginal cost of adding ITSA MTD is manageable. The catch: they can only file what you give them. Quarterly cadence still requires you to maintain the records weekly.

There's no "best" answer. The right choice depends on your transaction volume, whether you employ staff, your tech comfort, and what you already pay for.

If you are required to use MTD and your records are not yet digital, act now: bring them up to date from the date HMRC says your digital records must start, choose compatible software and check your current update deadlines.

1. Open a separate business bank account if you don't already have one. Move all parent payments, supplier spend, and staff wages through it. Every other MTD step gets easier when business spend stops mixing with personal.
2. Pick one tool (spreadsheet plus bridging, cloud accounting, or your accountant) and commit. Set it up properly with the right categories for after-school-club work.
3. Start a 15-minute weekly admin slot. Friday evening, last child gone, kettle on. Log the week's fees, snack and craft costs, hall hire, and (if you employ) the week's payroll.
4. If you employ staff and run PAYE, your existing RTI submissions continue separately. ITSA MTD layers on top for the trading-income side.
5. If you operate as a limited company, ITSA MTD doesn't apply to you. Confirm with your accountant; some clubs blur the line between sole-trader and limited-company structures.

If you do nothing else this month: the bank account split. Most disputes about income, expenses, and category totals can be traced to mixed personal-and-business spend that nobody can reconcile cleanly. The worst route is no route.

For the broader operational discipline applied across UK trades, see keeping your business expenses HMRC-ready in 15 minutes a week. Same weekly habit, different setting.

Check current GOV.UK guidance and HMRC compatible-software information for your own MTD obligations.

The time required varies with transaction volume, record quality and the software you use; the continuing duty is to keep accurate digital records and check the software-generated update. If you want full cloud accounting (especially with employees and PAYE), that's a different decision and we'd say so plainly.

The kit pairs with the after-school-club business documents bundle (£19.99) if you also want parent contracts, registration forms, behaviour and safeguarding policies, accident records, and GDPR templates with the right MTD-friendly categories built in.

This article is general guidance, not tax advice or guaranteed Ofsted readiness. For your specific tax position, consult a qualified accountant. For your registration and safeguarding obligations, consult Ofsted or your local authority's early-years team.