Get ahead of the curve – Prepare for Making Tax Digital now

Making Tax Digital (MTD) is a government initiative that requires businesses to maintain digital records of their income and expenditure and submit quarterly reports to HMRC.

From April 2026, self-employed individuals and landlords with an income of over £50,000 will be required to keep digital records as well as providing HMRC, through MTD compatible software, quarterly updates on their income and expenditure.

People can voluntarily join at any time. As the MTD deadline is all about helping to prevent common errors it could be the time saving and efficiency solution you’re looking for. With this in mind, we encourage you to explore MTD sooner rather than later as time will go by very quickly.  

What are the benefits of MTD for Income Tax Self-assessment?

MTD for Income Tax Self-assessment will simplify the tax return process for businesses and make it easier to comply with tax obligations. Additionally, it will help HMRC to collect accurate and up-to-date data on business income and expenditure, which will improve the efficiency of the tax system. Here is a summary of some of the MTD benefits for your business:

• Reduced administrative burden: Businesses will no longer need to keep paper records or submit paper returns, as everything will be done digitally.
• Reduced error rates: With digital records, you are less likely to make mistakes when submitting their tax returns. This could lead to significant savings in terms of both time and money.
• Improved accuracy: Digital records are more accurate than paper records, meaning that you can be confident that they are paying the correct amount of tax.
• Improved cash flow: You will be able to file returns more quickly and easily, which should result in improved cash flow.
• Increased efficiency: The quarterly reporting requirement of MTD means that you will need to keep on top of your finances on a more regular basis. This could lead to improved financial management and increased efficiency overall.

How can I prepare my business for MTD for Income Tax Self-assessment?

There are a few things you can do now to prepare your business for MTD for Income Tax Self-assessment, including:

• Ensuring that you have digital records of your income and expenditure;
• Registering for MTD in advance;
• Selecting an appropriate software solution.

What software solutions are available for MTD for Income Tax Self-assessment?

There are a number of software solutions available that can help you comply with MTD for Income Tax Self-assessment, including:

Xero: Xero is a cloud-based accounting software that allows businesses to manage their finances online. Xero is already compliant with MTD, meaning that businesses using the software will be able to submit their quarterly reports to HMRC without any additional work.

QuickBooks: QuickBooks is another cloud-based accounting solution that offers similar functionality to Xero. QuickBooks also offers a range of other features such as invoicing and payroll, making it a comprehensive solution for small businesses. Like Xero, QuickBooks is already compliant with MTD.

FreeAgent: A simple accounting software suitable for UK small businesses allowing you to track invoices and expenses. Sage Accounting: Online accounting software for small business owners and sole traders which offers one platform for bookkeeping and it is HMRC recognised.

Start preparing for MTD now

The introduction of MTD may seem daunting but with proper preparation it can actually provide many benefits such as increased accuracy and improved transparency between HMRC and taxpayers alike.

As long as your financial records are up-to-date then preparing your business should be relatively straightforward; research approved software providers in advance so that you’re ready when the time comes! By taking these steps now, you can ensure that your business is already on the way for being Making Tax Digital for Self-Assessment in April 2026.

If you would like to talk thorugh any aspects of your business planning, budgeting, forecasting and your financial accounts we offer a free one hour initial consultation. Get ahead and talk to McKenzies accountants in Oxted about making Tax Digital.