How to prepare your business for Making Tax Digital

Team Nomi

Sep 24, 2026
6 minutes read

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Making Tax Digital (MTD) is changing the way businesses and individuals manage their tax records and submit information to HMRC. Since April 2026, the first phase of Making Tax Digital for Income Tax has come into effect. Businesses that fall within the rules now need to keep digital records and use compatible software to submit updates to HMRC.

Now is the right time to review your current processes, choose suitable software, and ensure you’re ready to meet HMRC’s requirements. This guide explains what MTD means, who it applies to, and the practical steps you can take to stay compliant.

What is Making Tax Digital?

Making Tax Digital (MTD) is a UK government initiative designed to modernise the tax system. Instead of relying on paper records and manual tax returns, businesses and individuals must keep digital records and submit tax information electronically using HMRC-recognised software.

The program first became mandatory for most VAT-registered businesses in April 2019. Since April 2026, Making Tax Digital has also started rolling out for eligible self-employed individuals and landlords under Making Tax Digital for Income Tax.

What does Making Tax Digital mean for businesses?

Making Tax Digital means businesses must move away from manual bookkeeping and maintain accurate digital financial records throughout the year. Instead of preparing everything at year-end, businesses submit regular updates using compatible MTD software.

The aim is to:

• • Reduce common tax reporting errors
  • Improve the accuracy of tax submissions
  • Save time through digital record keeping
  • Give businesses a clearer view of their tax position throughout the year
  • Make communication with HMRC more efficient

Who needs to prepare for Making Tax Digital?

Depending on your business type and income, Making Tax Digital may already apply to you or will apply in the coming years.

You should prepare if you are:

• • A VAT-registered business required to follow MTD for VAT.
  • A self-employed individual with qualifying income that falls within HMRC’s current MTD rules.
  • A landlord with qualifying property income.
  • A business that wants to move to digital accounting before it becomes mandatory.

Even if MTD does not apply to you today, switching to digital recordkeeping early can make future compliance much easier.

How to prepare your business for Making Tax Digital

Preparing early helps avoid last-minute issues and gives you time to become familiar with the new process.

1. Check Whether MTD Applies to Your Business

The first step is to confirm whether your business falls within HMRC’s Making Tax Digital requirements. Check your business structure, income, and reporting obligations so you know when you need to comply.

2. Review Your Current Record Keeping

Look at how you currently manage your accounts. If you still use paper records or spreadsheets, consider moving to digital bookkeeping that can work with HMRC’s requirements.

3. Choose HMRC-Recognised Making Tax Digital Business Software

Using compatible MTD software is one of the main requirements. When choosing software, look for features such as the following:

• • HMRC recognition
  • Digital record keeping
  • Quarterly submissions
  • VAT and Income Tax support
  • Secure cloud storage
  • Accountant collaboration
  • Easy reporting and dashboard access

Selecting the right Making Tax Digital business software can save time and reduce errors throughout the year.

4. Move Your Financial Records Online

Import or upload invoices, receipts, expenses, and other financial records into your accounting software. Keeping records updated regularly will make quarterly submissions much easier.

5. Register for Making Tax Digital

If required, register for Making Tax Digital through your HMRC online account before submitting your first digital update. Make sure your tax information is up to date before registering.

6. Create a Quarterly Review Process

Rather than leaving bookkeeping until the end of the year, review your records regularly. Setting aside time each quarter helps ensure your submissions are accurate and reduces unnecessary stress.

Making Tax Digital preparation checklist

Use this simple checklist before your first submission:

• • Check whether MTD applies to your business.
  • Register for Making Tax Digital with HMRC if required.
  • Choose HMRC-recognised software.
  • Keep all financial records digitally.
  • Upload invoices and expenses regularly.
  • Review your bookkeeping every quarter.
  • Submit updates before HMRC deadlines.
  • Keep your software up to date.

Common mistakes businesses should avoid

Many businesses leave preparation until the last minute, which can lead to unnecessary problems. Some of the most common mistakes include:

• • Continuing to rely on paper records.
  • Using software that is not compatible with HMRC.
  • Missing quarterly submission deadlines.
  • Forgetting to keep digital records updated.
  • Waiting until the deadline before switching to MTD software.

Preparing early helps avoid these issues and makes compliance much easier.

Why using Making Tax Digital business software matters

Making Tax Digital cannot be managed efficiently without suitable software. Choosing the right HMRC-recognised MTD software helps businesses maintain digital records, automate calculations, submit updates directly to HMRC, and reduce manual work.

It also provides better visibility of your finances throughout the year, helping you stay organised and make informed business decisions.

Conclusion

Making Tax Digital is now an important part of how businesses manage their tax obligations. Preparing early by choosing the right software, keeping digital records, and reviewing your finances regularly will help you stay compliant and avoid unnecessary stress.

Whether you’re already affected by the latest rules or preparing for future phases of Making Tax Digital, taking action now will make the transition much smoother.

Note: This article is for general information only and should not be considered financial or tax advice. Always refer to the latest HMRC guidance or speak to a qualified accountant if you need advice specific to your circumstances.

Prepare for Making Tax Digital with Nomi

If you’re looking for Making Tax Digital business software, Nomi is an HMRC-recognised solution designed for accountants, bookkeepers, and businesses. It helps you keep digital records, manage VAT and Income Tax obligations, and submit information directly to HMRC from one platform.

With cloud-based access, regular compliance updates, and an easy-to-use interface, Nomi makes preparing for Making Tax Digital much simpler. You can also start a 30-day free trial to see how it fits your business.

Frequently asked questions

1. How do I know if my business needs Making Tax Digital?
Ans. It depends on your business type, tax obligations, and qualifying income. Check the latest HMRC guidance to see whether the rules currently apply to you.

2. Can I use spreadsheets for Making Tax Digital?
Ans. Spreadsheets may still be used in some cases, but they usually need compatible bridging software to submit information digitally to HMRC.

3. What software do I need for Making Tax Digital?
Ans. You need HMRC-recognised Making Tax Digital software that supports digital record keeping and electronic tax submissions.

4. Is Making Tax Digital mandatory?
Ans. Yes. Making Tax Digital is already mandatory for many VAT-registered businesses and is now being introduced for eligible self-employed individuals and landlords under the phased rollout.