Unlocking efficiency and accuracy: The benefits of Making Tax Digital for Income Tax
The way income tax self assessment returns are submitted is changing.
Starting from April 2026, Making Tax Digital for Income Tax (MTD for Income Tax) will impact sole traders, the self-employed and landlords with qualifying income over £50,000. The HMRC digitalisation initiative is aimed at making it easier for everyone to report their tax and do so correctly.
MTD requires individuals and businesses to:
- keep digital records
- use software that works with Making Tax Digital
- submit updates every quarter, bringing the tax system closer to real-time
With the introduction of MTD for Income Tax, HMRC is transforming the way taxpayers manage their affairs, ushering in a new era of digital efficiency and accuracy.
Here are some of the reasons to embrace this new era of digital reporting through benefits to you and your business.
Key benefits of Making Tax Digital for Income Tax
1. Simplified record-keeping
MTD for Income Tax requires taxpayers to maintain digital records of their income and expenses, significantly reducing the risk of lost or misplaced paperwork. With everything stored digitally, information is easier to access, update, and verify-saving valuable time throughout the tax year.
2. Greater accuracy and reduced errors
By using MTD-compatible software, calculations are automated, minimising human error often associated with manual submissions. This means your tax return will be more accurate, allowing you to forecast ahead and reduces the likelihood of mistakes that could trigger penalties or HMRC enquiries.
3. Real-time tax updates and betterfinancial management
MTD compliance requires quarterly updates rather than one annual submission, providing a clearer picture of your tax position throughout the year, this means no more January surprises! This ongoing insight allows for better cash flow management, early identification of tax liabilities, and informed decision-making.
4. Faster and more efficient submissions
Digital submissions via software are quicker compared to traditional paper filings. Processing digitally reduces admin time working with paper copies and receipts to transfer the data to digital platforms, and there are many digital tools available that allow for quicker scanning of documents meaning you spend less time on admin processes.
5. Enhanced compliance and peace of mind
Being proactive with digital record-keeping and regular updates can reduce stress and gives you confidence that your tax affairs are in order.
6. Environmental benefits
By minimising paper use and promoting digital processes, MTD also supports sustainable practices - helping both individuals and businesses contribute to environmental goals.
7. Planning for the longer term
Gone are the days of relying on year-old data to help drive your business decisions. With realtime information, business owners can plan much more effectively. Whether it's life goals, investments, or simply managing day-to-day operations, having access to up-to-date figures can turn this compliance requirement into a valuable planning tool.
8. Knowing your tax bill
Although quarterly submissions will include an estimated tax calculation, HMRC won’t use these to collect payment. However, the numbers will be there - helping individuals set aside funds and avoid last-minute surprises. Instead of facing an unexpected bill in January, you’ll have a good idea of what’s coming. That’s a huge relief for many, and a major benefit of MTD for Income Tax.
We’re here to help
If you would like help to prepare for MTD for Income Tax, our team are on hand to
support with:
support with:
- Reviewing your income sources
- Checking if you meet the MTD threshold and in which phase
- Setting up and using MTD-compatible software
Get in touch today to start preparing with confidence.
