Why you should be an early adopter of Making Tax Digital

For years, tax returns and paperwork have been a dreaded task for many businesses and individuals. This is where Making Tax Digital, from HM Revenue & Customs (HMRC), comes in. The government initiative requires businesses to maintain digital records of their income and expenditure and submit quarterly reports to HMRC. This initiative will soon require self-employed individuals and landlords with an income of over £50,000 to switch from manual submissions to keeping digital records using software that can link securely with HMRC systems.

In this article, we’ll delve into why it’s beneficial for business owners to become early adopters of Making Tax Digital (MTD).

Increased accuracy

One of the key benefits of MTD is that it makes tax submissions more accurate. With digital records, businesses can track their income and expenditure more effectively which makes it easier for them to ensure that their finances are up to date when they submit their tax returns. Automated software can also reduce the possibility of human error and the associated penalties that may come with making mistakes on your tax returns.

Real-time account visibility

Another bonus of MTD is that taxpayers can track their accounts in real-time through secure portals. This allows for better transparency between HMRC and taxpayers, as well as increased visibility for business owners to make informed business decisions in real-time. Plus, the software’s real-time features give business owners greater control over their financial situation.

Smooth and convenient

Using Making Tax Digital approved software to submit tax returns can save time for businesses and individuals, and may provide greater accuracy when handling complex financial data. With this system, businesses can avoid manual filing or the need to struggle with complex spreadsheets, leading to a smooth and convenient experience that increases a company’s efficiency.

Easier planning and budgeting

MTD software tracks income and expenditure, allowing for better planning, budgeting and forecasting as it provides an overview of the finances. Business owners can access this information and budget correctly, avoiding any unforeseen costs. This in turn gives business owners better control of their budgets and promotes quick decision making.

Legal obligation

For self-employed individuals and landlords with an income of over £50,000, we urge you to become early adopters for MTD well ahead of the April 2026 deadline.

HMRC has already mandated Making Tax Digital for VAT registered businesses. For companies fitting these criteria, storing tax records manually or still submitting through spreadsheets are no longer allowed to do so. By failing this MTD criteria can lead to fines from HMRC.

So, take note! It’s better for a business to embrace the technology and make the transition now, well ahead of the April 2026 deadline.

Get ahead with Making Tax Digital

Making Tax Digital certainly offers valuable benefits for businesses. But it is important to keep in mind that this process requires due diligence and planning to avoid any unpleasant surprises. As an early adopter of MTD, however, businesses have time to familiarise themselves with the system, access compatible digital accounting software, and ensure that financial records are up to date.

Embrace MTD now, and save time and money in the long run!

Mckenzies Chartered Accountants

Get the professional accounting help you need to reach your business goals with Mckenzies Accountants. Our team of chartered accountants and strategists are ready to develop a tailored solution for your business in Oxted, Surrey and the surrounding areas. Contact Our Accountants today to learn more.