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Are your systems ready for MTD? Five things to check as the clock ticks down
09 July 2025

HM Revenue and Customs (HMRC) is working to enhance compliance and improve efficiency with tax filings by implementing Making Tax Digital (MTD) for Income Tax.

However, taxpayers still need to get ready for MTD before it becomes mandatory in April 2026 for sole traders and landlords with gross income of £50,000 or more.

With the first major deadline looming, now is the time to get MTD ready.

• Verify your digital record-keeping

All business records must be digitised, ideally using HMRC-compliant software.

It is finally time to retire the paper ledgers and the disparate collection of documents stored on various devices.

The time has come to collate important information in a secure, centralised platform so that anyone filing their tax return can do so.

You will need to verify that this is the case by doing one last sweep of all your records to make sure nothing is going to slip through the cracks.

• Confirm your software compatibility

MTD requires the use of compatible software for both record-keeping and submissions.

Be sure you do your research on any software that you are considering using to make sure it will satisfy the requirement for MTD.

If you are unable to invest in new software, then you can continue to use Excel spreadsheets, provided you can link them to HMRC’s systems using a bridging solution.

However, many other benefits come with using established cloud-accounting platforms that are worth your consideration.

• Ensure workflow integration

Every part of your operations is going to need to be checked to ensure that the necessary information is being gathered correctly to make your quarterly MTD filings.

Fragmented workflows introduce the risk of missed invoices, unrecorded expenses, or other surprises that could lead to non-compliance.

• Train your team and assign responsibility

Your team, if you have one, need to know how to effectively use the MTD-compliant software so that they do not hinder the filing process.

They should be aware of the responsibilities that are placed upon them in terms of gathering and recording information.

Conducting regular training is important to ensure that staff are equipped to meet the requirements of MTD.

• Test the reporting process

There is still some time before MTD comes into force, so there is no harm in running a few tests and trials now.

As MTD brings with it quarterly filings, practising collating your data every three months instead of leaving it until your annual Self-Assessment tax return.

This will help to expose any issues before you are subject to HMRC’s scrutiny.

Taking action now reduces the risk of late submissions and penalties when the MTD deadline hits next year.

For advice and guidance on preparing for Making Tax Digital for Income Tax, speak to our team today.