Making Tax Digital for Income Tax is HMRC’s push to move self-employed individuals and landlords with over £50,000 in annual income onto a fully digital system. (This threshold will move down in the coming years, so make sure to check out our Making Tax Digital timeline.)
You’ll keep digital records in compatible software and send simple quarterly updates so HMRC gets real-time figures instead of one big batch at the end of the year.
Here’s how HMRC explains Making Tax Digital for Income Tax.
Although there’s a lot of confusion about the new MTD system, we listed the 8 benefits of it in this blog post.
Table of contents
- 1. Clearer digital records with less manual admin
- 2. More accurate submissions that reduce errors
- 3. Real-time numbers that help you plan your tax position
- 4. A simpler tax return at the end of the tax year
- 5. One place for all your tax records with Making Tax Digital
- 6. Better business decisions with digital tools
- 7. Easier collaboration with your accountant & HMRC
- 8. Long-term confidence as the UK tax system goes digital
- FAQ about MTD
1. Clearer digital records with less manual admin
When you keep digital records, you stop repeating the same tasks in different places.
No more half-updated spreadsheets, no more chasing receipts, no more retyping figures at the end of the tax year. Everything sits in one system that updates as you go.
If you’re self-employed or managing property income, this alone cuts a huge amount of routine admin. You record things once, in real time, and the software does the organising for you.
It’s cleaner, faster and far less effort than the old mix of paper, notes and manual entry.
2. More accurate submissions that reduce errors
When everything is logged digitally, the small mistakes that usually creep into a tax return are far less likely to happen.
Compatible MTD software pulls figures straight from your records, checks them as you go and flags anything that doesn’t look right.
You’re not typing numbers in multiple times or copying data from old spreadsheets, so there’s less room for slip-ups.
That means fewer HMRC questions, fewer corrections later and a much smoother experience when it’s time to submit your updates or final return.
3. Real-time numbers that help you plan your tax position
With digital records updating as you work, you always know where you stand.
You can see your income and expenses in real time, not months later when everything is already fixed. That makes it much easier to estimate the tax you owe and plan ahead.
You can make decisions with confidence because you’re not waiting for year-end totals or digging through old invoices. If something changes in your business, you spot it sooner and adjust before it becomes a problem. Real-time information simply gives you more control over your cashflow and your tax position.
4. A simpler tax return at the end of the tax year
Quarterly updates mean most of the legwork is already done by the time you reach the final submission. Your income and expenses have been recorded and sent throughout the year, so you’re not pulling everything together in one rushed stretch.
When you get to the end of the tax year, the return is more of a quick check than a full rebuild.
The software – whether that is a bridging software for MTD, or a fully compliant one – already holds the bulk of your information, which makes the whole process lighter, clearer and far less stressful.
5. One place for all your tax records with Making Tax Digital
Going digital means everything sits in one organised system instead of being scattered across different files, emails or apps. Your income, expenses, invoices and updates all connect to the same place, so you’re never hunting for missing figures or trying to match old spreadsheets with new ones.
It also means every update you send to HMRC comes from the same clean source.
Nothing gets lost, nothing goes out of sync, and you always have a clear view of what’s been recorded and what still needs attention. It’s a calmer, tidier way to manage your tax.
6. Better business decisions with digital tools
When your records sit inside proper accounting software, you get more than tidy numbers. You get clear insights into where your money goes, how your cashflow looks and what your profit actually is at any point in time.
Instead of guessing, you can see the impact of a quiet month, a big project or a new expense straight away. That makes everyday decisions easier:
- when to invest
- when to hold back
- when to adjust your prices.
Digital tools turn your tax records into something you can actually use to run the business better.
It also makes your accountant’s life easier. If you want advice on how to make the right business decision, book a free call with us – it’s free!
7. Easier collaboration with your accountant & HMRC
When your accountant can see the same up-to-date records you’re working from, everything moves faster. There’s no chasing missing invoices, no sorting out old spreadsheets and far fewer last-minute questions before a deadline.
It also means that it’s far more easier to communicate with HMRC, too!
Accountants can spot issues early, give clearer advice and handle the technical parts of MTD without digging through outdated information. Fewer emails and smoother submissions will become the new norm, because you’re both working from one clean, real-time source of truth.
8. Long-term confidence as the UK tax system goes digital
HMRC is moving the whole tax system towards real-time digital reporting, and Making Tax Digital for Income Tax is a major step in that direction. Getting comfortable with the process now means you’re not scrambling when the rules fully switch over in April 2026.
You learn the software, settle into the routine and build a setup that actually works for you. By the time MTD becomes mandatory, you’re already running smoothly.
If you want support getting everything in place early – from choosing the right software to keeping your records clean – WallsMan Creative is here to help UK creatives move into this new digital system with confidence.
FAQ about MTD
No. You’re not paying extra. You’re just sending the same info in smaller updates, which means fewer mistakes and fewer surprises.
Yes. HMRC is moving the whole system this way, and once you’re set up, it actually makes life easier.
After the setup, it cuts admin, reduces errors and keeps everything in one tidy place.
No. Digital records update as you go, so you spend less time fixing issues at the end of the year.
Not at all. Most tools are simple, guided and built for everyday users. Once you try it, it feels natural.
No. It just gives your accountant cleaner, real-time data. You’ll get faster answers and better advice.
It helps both sides. You get clearer records, fewer errors and a better view of your cashflow, so you understand your business sooner.
Quarterly updates are quick. Once your records flow into the software, you’re mostly reviewing, not rebuilding.
Over time, yes. You make fewer errors, you understand your numbers earlier and you get a clearer picture of where every pound is going. MTD for VAT is already live, so we speak from experience.
