HMRC’s Making Tax Digital: What You Must Do Before It’s Too Late
- Kew Accounts
- 6 days ago
- 2 min read
Introduction
Making Tax Digital (MTD) is no longer a future initiative—it’s actively reshaping how UK businesses manage and report their taxes. If you're still relying on spreadsheets or manual submissions, you're approaching a compliance risk.\
This guide breaks down what MTD is, who it affects, and what steps you should take now to stay compliant and efficient.
What is Making Tax Digital?
Making Tax Digital is a UK government initiative designed to modernise the tax system. It requires businesses and individuals to:
Keep digital records
Use compatible software
Submit updates to HMRC electronically
The goal is simple: reduce errors, improve accuracy, and streamline tax reporting.
Who Does MTD Apply To?
As of 2026, MTD requirements apply to:
VAT-Registered Businesses
All VAT-registered businesses must:
Maintain digital records
Submit VAT returns using MTD-compatible software
Income Tax (MTD for ITSA)
If you're self-employed or a landlord:
Threshold: £50,000+ income (already in scope or imminent)
Expanding to: £30,000+ income (phased rollout)
This means quarterly updates + a final declaration each year.
What Are the Key Requirements?
To comply with MTD, you need to:
1. Keep Digital Records
No more manual bookkeeping. Records must be stored digitally, including:
Income
Expenses
VAT details (if applicable)
2. Use MTD-Compatible Software
Spreadsheets alone are not enough unless connected via bridging software.
3. Submit Regular Updates
Instead of one annual submission:
Quarterly updates
End-of-period statement
Final declaration
Why MTD Matters for Your Business
Beyond compliance, MTD introduces operational benefits:
Improved Accuracy
Automation reduces human error in calculations and submissions.
Better Financial Visibility
Real-time data means better decision-making throughout the year.
Time Savings
Once set up, digital workflows reduce admin time significantly.
Common Challenges Businesses Face
Despite the benefits, many businesses struggle with:
Choosing the right software
Migrating from spreadsheets
Understanding reporting requirements
Keeping up with regulatory changes
This is where expert support becomes critical.
How to Get Ready for MTD
Here’s a practical approach:
Step 1: Assess Your Current Setup
Are you using spreadsheets? Desktop software? Paper records?
Step 2: Choose the Right Software
Look for:
HMRC-recognised compatibility
Automation features
Integration with your existing systems
Step 3: Digitise Your Records
Ensure all financial data is consistently recorded in digital format.
Step 4: Get Expert Guidance
Accountants or MTD specialists can ensure you're compliant from day one.
How We Can Help
We support businesses transitioning to Making Tax Digital with:
Software selection and setup
Data migration
Ongoing compliance support
Training for you and your team
Whether you're just starting or already partially compliant, we make the process straightforward.