Making Tax Digital
It All Begins Here
The government is modernising the tax system with Making Tax Digital (MTD), making it more efficient, accurate, and easier to manage.
For many small business owners, though, it can feel like another layer of complexity. But don’t worry, in this guide, we break down exactly what MTD means, who it applies to, and how it will affect your business.
What is Making Tax Digital?
Making Tax Digital (MTD) is a government initiative from HM Revenue & Customs that requires businesses to keep digital financial records and submit tax information using compatible software.
Instead of relying on spreadsheets or paper records, your accounts must be maintained digitally and submitted directly to HMRC through approved systems.
This reduces errors, improves accuracy and keeps your financial information up to date and in one place.
Who does it apply to?
MTD is being introduced in stages across the UK. Currently all VAT-registered businesses must follow MTD rules and VAT returns must be submitted using MTD-compatible software.
But from April 2026, MTD for Income Tax will also apply to Self-employed individuals and Landlords if your income is over £50,000.
There will be plans to eventually roll this out to all businesses but for now, if the above applies to you, you need to be making your tax digital.
What will change under MTD?
As MTD expands, businesses will need to adjust how they manage their finances.
You’ll need to:
● Keep digital records of income and expenses
● Submit updates to HMRC more regularly
● Use MTD-compatible accounting software
This means moving away from manual processes or standalone spreadsheets, unless they are linked to approved software.
How Making Tax Digital affects small businesses
For small businesses, MTD introduces more frequent reporting and a stronger reliance on digital tools.
At first, this can feel like extra work, but in reality, it often leads to better financial visibility.
With everything recorded and updated regularly, you can stay organised throughout the year to avoid last-minute stress at deadlines and ultimately make better-informed business decisions throughout the year.
Done properly, MTD gives you a clearer picture of your finances, not just at year-end, but all year round.
How we can help
If you’re still thinking “this sounds like a lot more work”. Don’t worry, we can help make the transition to Making Tax Digital straightforward and stress free.
From choosing the right software to managing your submissions, we handle the process for you, so you stay compliant without the hassle.
We can help you:
● Set up MTD-compatible accounting software
● Keep your records accurate and up to date
● Submit reports to HMRC on your behalf
● Understand what’s required at each stage
Our approach is simple, clear, and fully managed, so you can focus on running your business and avoid the initial headache of the set up!
Sound like something you need help with?
If you’re unsure how MTD applies to your business, or want to be sure you get set up properly, we’re here to help.
Get in touch today to make sure you’re prepared, compliant, and all set up for the future.