How to Make Your Business Compliant with Making Tax Digital (MTD)
- SME CofE
- Jun 3
- 4 min read
Updated: Jun 23
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.
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.
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 created the Ready Steady Trade Package to give sole traders and tradespeople the tools they need to look professional, stay compliant, and confidently manage the business side of their trade.
This simple monthly package includes:
A professional virtual business address – separate your work life from your home life and present a polished, credible image
Mail handling – keep your business post organised and secure
Access to digital tools – including software to help you meet Making Tax Digital (MTD) requirements
Helpful resources, reminders and guides – to support your digital record-keeping and quarterly updates
A basic online presence – with a landing page to help you showcase your services professionally
Need more support? We also offer accounting add-ons, including fully managed bookkeeping and annual return filing.
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
Making Tax Digital (MTD) is coming — and the earlier you start preparing, the smoother the transition will be. Getting set up now means you can:
Avoid last-minute stress when the rules change
Get familiar with digital tools at your own pace
Put systems in place that help you stay organised and compliant
With over 780,000 individuals expected to be impacted in 2026 — and another 970,000 in 2027 — being prepared gives your business an advantage.
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