What is Making Tax Digital?

Making Tax Digital is HMRC’s initiative to make the tax system more effective, reduce errors, and encourage digital record-keeping. Instead of submitting a single tax return once a year, businesses will need to: 

• Keep digital records of their income and expenses

• Submit quarterly updates to HMRC using MTD-compatible software

• File an end-of-period statement (EOPS) and a final declaration each year

This gives HMRC a clearer view of your income throughout the year - and helps you stay on top of your tax position too.

Who is affected by MTD? 

• All VAT-registered businesses must already follow MTD rules for VAT returns

• Sole traders and landlords earning over £50,000 will fall under MTD for Income Tax Self Assessment (MTD for ITSA) starting April 2026

• Those earning over £30,000 will be brought in from April 2027

• Those earning over £20,000 will be brought in from April 2028

• MTD for Corporation Tax is coming but hasn’t been given a confirmed date yet

It's simple, if your income passes the threshold, you’ll need to comply.

We track each client’s position at Go Cloud Accounting so no one gets caught out by upcoming deadlines or overlooked rules.

What do I need to do?

To stay compliant under MTD, you’ll need to:

• Use MTD-compatible software like Xero, QuickBooks or FreeAgent

• Record your business income and expenses digitally

• Submit your updates through the software every quarter

• Finalise your year-end data with a digital submission

If you're still using spreadsheets or paper, now’s the time to upgrade. We help all new Go Cloud Accounting clients get set up with fully compliant cloud software, including training and support if you need it. Whilst we don't now exactly what the process will look like at the moment, we'll work with you to ensure you're compliant.

What if I don’t comply?

MTD is not optional if you fall within the scope. HMRC is planning a points-based penalty system for MTD non-compliance, meaning:

• Late submissions add up points

• Points turn into fines

• The more frequently you miss a deadline, the more you’ll pay

This makes it essential to have software that keeps you on schedule, with reminders, automated syncing, and alerts.

Why it’s not just about compliance

Beyond staying legal, MTD can actually help your business:

• You get better visibility of your finances

• You’re more prepared for tax bills

• You can spot cash flow issues early

• You can make business decisions based on real numbers, not guesswork

At Go Cloud Accounting, we've seen clients go from stress and spreadsheets to real confidence once everything’s set up and working properly.

How We Can Help

At Go Cloud Accounting, we work with clients to make the transition to MTD smooth and stress-free. Whether you’re a sole trader or limited company, we’ll ensure your systems are ready, your records are digital, and your submissions are done right. We also provide training, ongoing support, and access to software that fits your business needs.

MTD isn’t going away. The best move you can make now is to prepare early - not when the deadline is looming.

Go Cloud Accounting can help you get everything in place. Talk to us and we’ll check your current setup, help you upgrade, and make sure you're fully compliant.

This post was written by Go Cloud Accounting - supporting UK small businesses with expert advice and digital tools that make tax simple.

Want help with MTD? Let’s talk.