Making Tax Digital: Next steps for eligible businesses

You’ve filed your self-assessment, and now it’s clear that your business falls under Making Tax Digital (MTD) requirements. While this may not be new news, knowing what comes next is essential to stay compliant and avoid costly mistakes.

From April 2026, eligible sole traders and landlords will need to keep digital records and submit quarterly updates to HMRC. For many business owners, this represents a shift from annual reporting to a more regular, digital-first process – but with the right preparation, it doesn’t have to be complicated.

We’ve broken down what you should focus on next and are sharing our top tips for ensuring your MTD transition is smooth and straightforward.

Check if MTD applies to you

Even if you’ve just filed a self-assessment, you might be surprised who needs to comply.

• Thresholds matter: If your annual turnover is above £10,000 for income tax purposes, MTD likely applies.
• Exceptions exist: Certain types of income, trusts, or businesses with complex arrangements may have different requirements.
• Make sure your business is registered for MTD through your HMRC online account. Doing this early avoids last-minute stress.

Get your records digital ready

MTD isn’t just about submitting online, it’s important to consistently keep digital records for your income and expenses.

• Choose MTD-compatible software: Look for accounting tools that connect directly to HMRC.
• Record everything digitally: Track income, expenses, and receipts in your software rather than spreadsheets or paper alone.
• Review past records: Ensure your historical figures align with your self-assessment submission.

Some software offers integrations for bank feeds, invoicing, and expense scanning, making compliance easier and more accurate.

Plan your quarterly updates

One of the biggest changes under MTD is that you’ll submit four updates per year, instead of one annual return.

• Mark your deadlines: HMRC sets quarterly reporting periods. Missing a deadline can trigger penalties.
• Reconcile regularly: Don’t wait until the last week. Regular reconciliations prevent errors and make tax less stressful.
• Review your tax estimates: Each update gives you a chance to adjust your figures and avoid surprises.
• Treat these updates like mini self-assessments – they keep your finances tidy and avoid year-end panic.

Avoid these common mistakes

• Incomplete digital records: Only part of your income or expenses are recorded digitally.
• Software errors: Incorrect categorisation or failed submissions can lead to HMRC queries.
• Ignoring deadlines: Quarterly updates are mandatory – late submissions lead to fines.

One tip we share with our clients is to schedule a monthly review of your accounts. A little consistency now prevents major headaches later.

Seek expert support

Making Tax Digital introduces new requirements for small businesses, but with expert guidance, the process can be seamless and fully integrated into your routine, ensuring compliance without disruption.

At Verallo, we partner with small business owners to:

• Advise on the right MTD compatible software for your business needs
• Review and reconcile your accounts before submissions to give you peace of mind
• Identify tax-saving opportunities you might otherwise miss

We don’t just handle the numbers, we work alongside you, helping you make informed decisions and focus on what matters most: growing your business.

Get in touch with our experts today by calling 0203 912 9933 or email info@verallo.com.