How Can Businesses Prepare for Making Tax Digital?
Posted on February 18th, 2026.
In the rush of day-to-day operations, changes to tax rules can easily slip down the priority list. Yet with the UK government rolling out Making Tax Digital (MTD), it is becoming increasingly important for businesses, especially small and medium-sized enterprises, to rethink how they handle tax.
Done well, MTD turns tax from a once-a-year scramble into a regular touchpoint with your numbers. Accurate records, updated throughout the year, make it far easier to spot trends, control cash flow, and act early rather than late. Getting used to new systems can feel unfamiliar at first, but modern tools are designed to support you rather than overwhelm you.
Quarterly digital updates effectively become health checks for your finances. Instead of hunting through paperwork at year-end, you work with fresher figures, clearer dashboards, and a structure that encourages better habits. With a bit of planning now, MTD can help you move from reactive tax work to more confident, forward-looking financial management.
MTD Changes and Key Deadlines
The Making Tax Digital initiative marks a major shift in how records are kept and submitted to HMRC. The focus is on digital record-keeping and software-based submissions, replacing spreadsheets and paper files with systems that link directly to HMRC. For many small businesses, that means taking a hard look at current processes and replacing manual work with digital workflows that are consistent and traceable.
Instead of typing figures into online forms each time a return is due, MTD expects records to be maintained digitally from the outset. This reduces the risk of transcription errors and helps ensure that the figures used in submissions are drawn from up-to-date data. In practice, that means using MTD-compatible software that can record income, expenses, and VAT entries in a way HMRC recognises. The move may feel like a step change, but it also removes many of the weak points in traditional processes.
Key MTD dates and thresholds to keep in view include:
- MTD for VAT now applies to all VAT-registered businesses, regardless of turnover
- MTD for Income Tax Self Assessment is due from April 2026 for self-employed and landlords with income above £50,000
- A further extension from April 2027 will apply to those with income above £30,000
These developments matter because they decide when you must switch to digital record-keeping and software-based submissions. If you are already VAT-registered, the change for VAT has effectively arrived. If you are self-employed or a landlord, income levels determine when the new rules start to apply. Waiting until the last moment risks rushed decisions and unnecessary stress.
Early preparation gives you time to test systems, refine routines, and seek advice where needed. Instead of racing to meet a new requirement, you can move at a measured pace, introducing software, updating processes, and training staff in stages. That approach helps you stay compliant while also gaining the benefits MTD can bring, such as more reliable data and better visibility over your obligations.
Ultimately, MTD is not just about keeping HMRC satisfied. Used well, it supports better internal discipline around record-keeping, reduces the scope for costly mistakes, and brings your tax processes in line with the wider digital tools you already use to run your business.
MTD Software Options for Seamless Compliance
Choosing the right MTD software is one of the most important decisions you will make in this transition. The best systems feel natural to use, sit comfortably alongside your existing tools, and give you a clear view of your numbers. A cluttered or confusing platform will be used reluctantly, which defeats the purpose of going digital in the first place.
When assessing options, it helps to look beyond the headline features and think about day-to-day reality. How quickly can you enter or review transactions? Does the layout make sense to you and your team? Can your bookkeeper or accountant access the same system without awkward workarounds? Answering these questions honestly will tell you far more than a long list of technical specifications.
Useful capabilities to look for in MTD-compatible software include:
- Cloud-based access so you can review figures securely while away from the office
- Automatic software updates that keep pace with HMRC requirements
- Custom reporting tools that let you focus on the numbers that matter most to your business
Security and compliance should sit at the heart of your choice. Software that is actively maintained and clearly marked as MTD-compatible gives reassurance that digital links to HMRC are properly handled. Built-in checks, audit trails, and structured workflows all help to keep records consistent and support you if HMRC ever asks for further detail or clarification.
It is also worth thinking about future needs, not just current ones. MTD is being phased in gradually, which means requirements around income tax will expand over the coming years. Choosing a package that can handle VAT now and income tax later allows you to stay on one system rather than jumping between platforms as rules change. That continuity saves time, reduces training demands, and keeps your financial history in one place.
Support is another important element. Vendors who offer clear guidance, training sessions, or webinars can make the learning curve much smoother. Over time, as you and your team become more familiar with the software, it moves from being “something new to learn” to a practical part of your toolkit for financial decision-making.
Adapting to Quarterly Updates and Understanding Affected Businesses
Quarterly updates are one of the most noticeable changes under Making Tax Digital. Instead of gathering information once a year and submitting a single annual return, you will be interacting with your figures more frequently. For some businesses, that feels like extra work; in reality, it spreads effort more evenly and turns tax into a regular, manageable task.
These updates encourage you to keep records current rather than putting things off until year-end. Working with fresher data means your cash flow forecasts are more accurate and your understanding of performance is sharper. It becomes easier to spot patterns early, whether that is rising costs, seasonal dips in income, or recurring late payments. Regular updates keep your numbers closer to real time, which strengthens decision-making throughout the year.
Quarterly updates also differ from the old annual model in how they shape planning. Instead of one large deadline, you now work with a steady rhythm of submission dates. That rhythm can support better budgeting and more consistent oversight of taxes owed. Rather than waiting to see a single, large bill, you gain a clearer view of your position as the year unfolds.
Businesses caught by MTD fall into specific groups, and knowing where you sit is important. All VAT-registered businesses are already within the scope of MTD for VAT. Over the next few years, self-employed individuals and landlords above certain income levels will also be brought into MTD for Income Tax. Even if your business is not captured yet, aligning your processes now means you will be ready when thresholds apply to you.
To prepare for quarterly updates, you can map out a practical sequence of actions:
- Review your current record-keeping process and identify manual steps that can move into your software
- Decide who will be responsible for updating records and when those updates will take place
- Build quarterly review dates into your diary so submissions never creep up on you unexpectedly
Training and support form the final piece of the puzzle. Ensuring your team knows how to use the software, understands what information must be recorded, and appreciates the importance of timeliness will make quarterly updates far easier to manage. Bringing in a bookkeeper or accountant who is familiar with MTD requirements can add further confidence, especially in the first year or two of the new regime.
Handled thoughtfully, quarterly updates do more than satisfy HMRC. They encourage healthier financial habits, make forecasting more reliable, and give you a clearer picture of how your business is performing throughout the year, not just at year-end.
Related: Bookkeeping vs. Accounting: What Are the Differences?
Get Ready For Digital Tax With Expert Help
Responding to the shift towards Making Tax Digital can feel like one task too many, but it is also a chance to tidy your systems and gain far clearer insight into your finances. With the right software, structured processes, and regular reviews, MTD becomes a framework that supports better decisions rather than a burden on your time. Preparing now keeps you ahead of the 2026 requirements and leaves room to refine things calmly.
You do not have to work through this transition alone. At Sameep The Bookkeeper, we help you put MTD-compliant systems in place, keep your VAT Returns Service running smoothly, and shape routines that fit the way your business already operates. Our focus is on keeping your records clear, your submissions accurate, and your time free for the work that matters most to you.
You can reach us via email at [email protected] or call +07894 533974.
Contact Us
How Can We Help?
Send the team a message.
