Making Tax Difficult? Making Tax Delightful? Neither of these – Making Tax Digital is what MTD stands for. The new way of letting HMRC know your income tax information has been in the pipeline for so long it feels almost strange for it to be actually up and running.

As an accountant, I was paying attention (okay, slightly paying attention) when it was first announced, and I’ve watched it creep nearer and nearer as the years have gone by.

One thing that became very clear, and probably this is universal, clients were not so interested. In fact, they have all avoided it for as long as possible, so I couldn’t try things on the pilot scheme first and have been thrown in the deep end now that it is actually on us.

But enough about MTD from an accountant’s perspective; what if you are a taxpayer who, like my clients, has resisted it for as long as possible, even though you know you need to sign up? Or perhaps you aren’t in the mandatory category this year and won’t be joining MTD until 2027 or later? What do you do? What is MTD anyway?

If you are VAT registered, you will already know your accounting software sends a digital version of your VAT return straight into HMRC’s own software to report the VAT information. MTD for IT is the same thing except it is for income tax. All the information that would normally go on a self-assessment tax return for either the Self Employment page or the Property Income page will instead be sent from your software to HMRC’s. This will happen quarterly and will be followed by a final annual submission to include any final adjustments, along with anything else that would normally be on the rest of the VAT return. NB: if your business is a limited company, then MTD for IT doesn’t apply to you.

First, it’s not too late even if you are mandated to join in 2026. Let me set out the steps.

1. First, find out if/ when you need to sign up: https://www.gov.uk/guidance/find-out-if-and-when-you-need-to-use-making-tax-digital-for-income-tax

2. If you have an accountant, bite the bullet and get in touch with them today. Ask them what they want you to do, i.e. what the next steps are. Read the following anyway, because it will give you some idea of what to expect.

3. If you don’t have an accountant, you will need to sort everything out yourself. This boils down to two things: keeping digital records and submitting digital returns to HMRC at the correct intervals.

4. You need to be registered for MTD. Even if you are already registered for MTD for VAT, you still need to separately register for MTD for IT. I’m assuming you already have access to your HMRC online account, as you will need these credentials. If you haven’t, you will need to set one up. Follow this link for instructions: https://www.gov.uk/guidance/sign-up-for-making-tax-digital-for-income-tax

5. You need to keep digital records: the bare minimum is to record in your software the date, the amount, and the tax category for each and every business transaction. There is a concession to the reality of retail businesses where the daily totals from the till can be added, rather than each individual sale. If you are already using software, check that it is MTD-ready. HMRC have provided help on this: https://www.gov.uk/guidance/choose-the-right-software-for-making-tax-digital-for-income-tax

6. Connect your software to HMRC. Each software platform will be slightly different, but your software provider can help you with this. Somewhere in the settings, you will need to provide your HMRC credentials and agree to the data transfer.

7. Once HMRC is connected, “obligations” will be sent to your software, listing the expected quarterly returns. You can also view this information by logging into your online tax account.

8. Send your first quarterly submission. Only do this once you have all your digital records for that quarter up to date.

To summarise: MTD means digital communication between your records and HMRC for the self-employed and for landlords. Get MTD-ready software and USE IT. Register for MTD and send regular submissions to HMRC.

Or you could just get a good accountant to do all this for you.

If you would like any further advice on Making Tax Digital and you havnt spoken to an accountant yet then please do get in touch. My website is https://www.ghbk.co.uk/ or you can call 0115 989 9054