Hey there, business owners, freelancers, and self-employed professionals! If you’ve been hearing about Making Tax Digital (MTD) and wondering what it means for you, don’t worry—you’re in the right place. MTD is a major shake-up in the way taxes are reported, and with the next phase rolling out soon, it’s important to get ahead of the game.
The good news? I’m here to break it down in a simple, friendly, and stress-free way. By the end of this guide, you’ll know exactly what MTD is, who it affects, when it starts, and how you can get set up quickly and easily
Is Making Tax Digital Actually Happening in 2025?
Yes! Making Tax Digital is happening, and it’s here to stay. HMRC has been rolling out MTD in stages, and by 2025, even more businesses, landlords, and self-employed individuals will need to comply. The main aim? To make tax reporting easier, more efficient, and error-free.
If you’re still manually tracking expenses in a spreadsheet (or—gasp!—a paper notebook), it’s time to upgrade. MTD is all about keeping digital records and submitting tax updates online—which actually makes your life a lot easier in the long run.
What Does Making Tax Digital Mean for the Self-Employed?
If you’re self-employed and earning above £30,000, you’ll need to comply with MTD rules. This means:
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Keeping digital records of your income and expenses.
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Using HMRC-approved software to record transactions.
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Submitting quarterly tax updates rather than an annual tax return.
Instead of the usual last-minute rush before your self-assessment deadline, MTD will spread out your tax reporting across the year. No more scrambling to find receipts or panicking over missed deadlines—it’s all about staying organised and in control.
What’s the Deadline for Making Tax Digital?
Here’s what you need to know about MTD deadlines starting in April:
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2026 – MTD will be mandatory for self-employed individuals and landlords earning over £50,000.
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2027 – MTD will extend to those earning between £30,000 and £50,000.
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2028 – MTD will include those earning over £20,000, as announced in the 2025 Spring Budget.
For now, if you earn less than £20,000, you won’t be required to sign up—though it’s always a good move to get ahead of the game!
How Do I Set Up Making Tax Digital?
Setting up for MTD is simpler than you might think. Here’s a step-by-step guide to get you started:
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Check if you need to register – If you earn over the MTD threshold, you must sign up.
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Choose MTD-compatible software – More on that in a moment!
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Sign up for MTD through HMRC – This can be done online with your Government Gateway ID.
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Start keeping digital records – Your software will help you track everything automatically.
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Submit quarterly updates – Instead of a single tax return, you’ll submit smaller updates throughout the year.
The Best Software for Making Tax Digital
To comply with MTD, you’ll need HMRC-approved software to manage your tax records. My top pick? Xero.
Xero is a simple, user-friendly tool for businesses of any size. It automates tax tasks, tracks expenses, and integrates directly with HMRC, making compliance easy.
Using MTD-compatible software like Xero saves time and reduces errors. It syncs with your bank, categorises expenses, and gives you real-time cash flow insights so you can make smarter financial decisions.
If you’re after a free option, check out our blog on free accounting software. But honestly, if you’re earning that much, investing in good software is worth it! The right software makes MTD stress-free.
How to Register for Making Tax Digital
Ready to sign up? Here’s how to register for MTD:
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Head to the HMRC website and log in with your Government Gateway ID.
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Choose your business type (self-employed, landlord, or limited company).
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Enter your tax details and confirm your eligibility.
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Link your chosen MTD-compatible software to your HMRC account.
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Start submitting digital records and quarterly updates!
It’s that easy! And if you need help, there are plenty of accountants (hi!) who can guide you through the process.
The Benefits of MTD
✅ Less Stress – Quarterly updates mean no more last-minute tax return panic. No lost receipts or sleepless nights—just a smoother, more manageable process.
✅ More Accuracy – Digital records reduce human error. Xero automates data entry, minimising mistakes and helping you avoid penalties.
✅ Better Financial Planning – Real-time tax updates mean no nasty surprises. You’ll always know what you owe, so you can budget accordingly.
✅ Easier Tax Reporting – MTD software automates bookkeeping. Features like bank feeds and direct HMRC submission cut admin time and hassle.
✅ Future-Proofing – Digital tax reporting is the future. Getting on board now prepares your business for upcoming changes in accounting tech.
Final Thoughts
Making Tax Digital might sound like a big change, but it’s designed to make life easier. The key is to start preparing early so you’re not scrambling when the deadlines arrive.
Need help getting MTD-ready? I’m here for you! Let’s simplify your finances together—get in touch, and let’s make tax less taxing!
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