{"id":44246,"date":"2025-12-04T16:09:17","date_gmt":"2025-12-04T16:09:17","guid":{"rendered":"https:\/\/www.simplybusiness.co.uk\/?post_type=knowledge&p=44246"},"modified":"2026-01-29T14:23:42","modified_gmt":"2026-01-29T14:23:42","slug":"how-to-prepare-for-making-tax-digital","status":"publish","type":"knowledge","link":"https:\/\/www.simplybusiness.co.uk\/knowledge\/business-tax\/how-to-prepare-for-making-tax-digital\/","title":{"rendered":"Making Tax Digital \u2013 how to prepare and mistakes to avoid"},"content":{"rendered":"\n

For many years, small business owners and the self-employed have used the annual Self Assessment to report their income and tax. In fact, as of October 2025, 3.5 million people<\/a> had already completed the process for the 2024-25 tax year \u2013 with 97 per cent choosing to do it online the previous year.<\/p>\n\n\n\n

But big changes are coming, as HMRC\u2019s Making Tax Digital<\/a> (MTD) initiative will roll out in 2026. In short, it\u2019s reshaping how businesses handle their tax in a bid to make record-keeping easier, more accurate, and more efficient. <\/p>\n\n\n\n

If you\u2019re self-employed or run a small business, the shift from one annual tax return to quarterly digital updates might sound daunting. But with the right preparation, your finances could actually be clearer.<\/p>\n\n\n\n

In this guide from GoSimpleTax,  see what\u2019s changing and what you need to do now \u2013 especially as the next Self Assessment deadline approaches.<\/p>\n\n\n\n

The current Self Assessment process<\/h2>\n\n\n\n

Under the current Self Assessment system, you\u2019re required to record your income and expenses and then submit your Self Assessment by 31 January each year. For the 2024-25 tax year (due by 31 January 2026), you\u2019ll still do this in the usual way. <\/p>\n\n\n\n

But from April 2026, MTD for Income Tax Self Assessment<\/a> (MTD ITSA) will begin rolling out, initially for self-employed individuals and landlords earning over \u00a350,000 a year. Currently, that\u2019s thought to be around 864,000 people<\/a>. <\/p>\n\n\n\n

Those earning above \u00a330,000 will follow in 2027 \u2013 and by 2028, it\u2019s believed that anyone earning over \u00a320,000 from self-employed and property income will be included. This could be up to 2.9 million people in the UK.<\/p>\n\n\n\n

Read more:<\/strong> Applications open for Making Tax Digital exemptions<\/a><\/p>\n\n\n\n

What MTD could mean for you<\/h3>\n\n\n\n

Under MTD, you\u2019ll no longer submit one big annual return. Instead, HMRC requires you to send quarterly updates using MTD-compliant software. <\/p>\n\n\n\n

Each update will include your business income and expenses for that period, so that HMRC (and you) has a real-time view of your tax position.<\/p>\n\n\n\n

At the end of the year, you\u2019ll still need to make a final declaration similar to the current Self Assessment. This will confirm your total income and allow you to make any adjustments. <\/p>\n\n\n\n

Read more:<\/strong> 72% of businesses expect MTD to increase their costs<\/a><\/p>\n\n\n\n

\"Making<\/figure>\n\n\n\n
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Why this change is happening<\/h3>\n\n\n\n

MTD is designed to:<\/p>\n\n\n\n