How to Make Your Business Compliant with Making Tax Digital (MTD)

If you’re a sole trader, landlord, or tradesperson in the UK, there’s a major change on the horizon: Making Tax Digital for Income Tax Self Assessment (MTD ITSA).

From 6 April 2026, anyone with qualifying income over £50,000 will be legally required to maintain digital records and submit quarterly updates to HMRC using MTD-compatible software.

It might feel like a long way off, but preparing now can save time, reduce stress, and help your business remain compliant. This blog explains what the changes mean, what steps you should take, and how the SME Centre of Excellence’s Ready Steady Trade Package can help.

What is Making Tax Digital for Income Tax?

Making Tax Digital is the UK Government’s plan to modernise the tax system. It’s part of a wider initiative to improve accuracy, reduce errors, and simplify the tax reporting process.

Starting in April 2026, if your combined self-employed and property income exceeds £50,000 (before expenses), you will be required to:

• Keep digital records of all business income and expenses

• Use MTD-compatible software

• Submit quarterly updates to HMRC

• Submit a final end-of-year declaration

The threshold will reduce to £30,000 from April 2027, meaning even more small businesses and sole traders will be included.

Who Needs to Comply?

If you are:

• A sole trader

• A landlord

• A self-employed professional

• A tradesperson or contractor

… and your income before expenses is above the threshold, you need to prepare now.

Why MTD Compliance Matters for Tradespeople and Small Businesses

Many small business owners and tradespeople manage their finances in informal ways — through spreadsheets, handwritten notes, or annual catch-ups with an accountant.

While this might have worked before, it won’t be compliant under MTD. Failure to adopt digital systems could lead to:

Missed Deadlines and Penalties

Relying on manual processes increases the risk of missing quarterly deadlines or submitting incorrect information, which may lead to penalties and unnecessary stress.

Administrative Overload

If you wait until the deadline, the learning curve could be steep. Getting used to new software and systems takes time, and trying to do this all at once could impact your day-to-day operations.

Missed Business Opportunities

More clients, especially larger contracts, expect professionalism. Showing that your tax affairs are in order helps build trust — and may even become part of supplier checks or prequalification processes.

How to Prepare for Making Tax Digital

If you're wondering where to start, here are a few key actions to take now:

1. Review your current record-keeping system

Are you keeping track of all your business income and expenses? Is it digital? If not, now’s the time to shift.

2. Choose MTD-compliant software

Look for simple, HMRC-recognised tools that let you record income and submit reports digitally.

3. Set up a business address and email

A business address builds trust with clients and suppliers and keeps your personal address private — while a business email keeps communications professional and easy to track.

4. Get support where needed

You don’t have to figure it all out yourself. Getting support early can reduce the pressure and help you get used to the changes in stages.

How the Ready Steady Trade Package Can Help

At SME Centre of Excellence, we’ve developed the Ready Steady Trade Package to support tradespeople and sole traders as they prepare for Making Tax Digital and build a more professional image.

It’s a monthly plan that provides:

• A professional virtual business address to separate work from home life

• Mail handling to keep your tax and business documents organised

• Help setting up basic digital tools that align with MTD requirements

• Access to resources, reminders, and support to guide you through digital record-keeping and quarterly updates

• A basic online presence, with a business email and landing page to increase your credibility

It’s not a replacement for an accountant — but it’s a reliable starting point for those looking to stay compliant and make a professional impression.

Don’t Wait for the Deadline — Start Preparing Now

The government has already begun encouraging businesses to join the MTD testing programme. Those who join early can:

• Get support from HMRC

• Avoid last-minute issues

• Familiarise themselves with digital systems in a low-pressure setting

  
  

With over 780,000 individuals expected to be impacted in 2026 — and another 970,000 in 2027 — being prepared gives your business an advantage.

Let’s Make Tax Work for You

Whether you're just getting started or already using digital tools, navigating MTD can still feel overwhelming — especially when you're also trying to run a business. That’s where we come in.

Our expert team is here to take the stress out of tax. From choosing the right software to managing your bookkeeping and staying compliant, we offer tailored support to help you save time, reduce errors, and focus on what you do best.

Book a free 15-minute conversation with one of our advisors today. We’ll take the time to understand your business, explore your current setup, and show you how we can support everything from digital accounting to wider financial management.

Because when your finances are in good hands, your business is free to grow.

Book Now