What’s all the fuss about Making Tax Digital?
It all depends on where you’re starting from, and whether you use more than one software package to handle your business record-keeping.
If your business is straightforward, Making Tax Digital should be too. The main changes will be to make sure the way you keep your bookkeeping records in a way that complies with Making Tax Digital; and (if you weren’t before) to update your bookkeeping on a regular basis so that you can send quarterly updates to HMRC.
The slightly trickier aspect of Making Tax Digital is the requirement for end-to-end digital links. It doesn’t only apply to your bookkeeping software or spreadsheet, which needs to be able to digitally link to HMRC’s computer system – it also applies to any other software package or online platform you use containing financial information that forms part of your bookkeeping records.
What’s a digital link?
Making Tax Digital doesn’t allow figures to be manually copied and pasted from one software program to another. It also doesn’t allow figures to be read from a report in one system and copy-typed into another. To comply with Making Tax Digital, there must be a valid digital link in place.
A valid digital link can be created by:
- An API (application programming interface) or “integration”, where one software package is able to transfer information directly into another;
- A .csv or .xml export/import, where data can be exported from another software package in an MTD-compatible format, and imported into your bookkeeping software in exactly the same format with no manual intervention;
- Using formulae and linked cells in spreadsheets – column and row totals must be calculated by formula, not typed in by hand – and figures must be transferred from one sheet to another by a link, not manually copy-typed.
The more systems you use, the tricker Making Tax Digital will be. Any software system you use to record financial data, needs to be able to integrate with your bookkeeping software using a digital link, so you can transfer the relevant data between systems without the need for manual intervention. You may need an accountant to help you set up the digital link.
If you only use a single system, you should find Making Tax Digital pretty easy – it’s just getting used to a new way of doing things.
What might you need to change to comply with Making Tax Digital?
Here’s a summary of some of the things you might need to consider when moving from Self Assessment to Making Tax Digital:
| If you currently… | Under MTD, you’ll need to… |
| Only do your bookkeeping once a year, anything up to 10 months after the end of the tax year | Update your bookkeeping at least once a quarter, within 4-5 weeks of the quarter end. |
| Only keep a note of the amount you received / paid and what it was for | Record the date as well. |
| Only keep a note of the date and amount you received / paid | Record the category as well – even if you only plan to put the grand total of your expenses on your Tax Return. |
| Keep handwritten bookkeeping records or lists typed up in Word | Change the way you keep your bookkeeping records to a digital method. |
| Keep spreadsheet bookkeeping records | Find bridging software so you can submit your spreadsheet figures directly to HMRC every quarter – or ask your accountant to do it. You’ll need to calculate totals using formulae; and use links to transfer totals between sheets. |
| Keep your bookkeeping in software that isn’t compatible with Making Tax Digital | Find out if you can export your data in an MTD-compatible format so it can be imported into bridging software – or change the software you use to a package that is MTD-compatible. |
| Keep your bookkeeping in software that can submit your figures to HMRC every quarter but can’t do the end of year return | Find an MTD-compatible tax package that can import the data from your bookkeeping software at the end of the tax year – or ask your accountant to do it. |
| Keep your bookkeeping in software that can submit your figures to HMRC every quarter AND do the end of year return | Check you don’t need to digitally link any other software packages you use – and, if you don’t, you’re all sorted! |
| Use separate software, online marketplaces or payment platforms to handle aspects of your record-keeping – for example, Amazon, eBay, PayPal, sales invoicing software, an EPOS system or a stock control system. | Check that you can digitally link these other systems to the bookkeeping software you’re using – either through an “integration” or by exporting your data in an MTD-compatible format so it can be imported into your bookkeeping software. |
Support for doing your own bookkeeping
Springreach Training & Coaching offers accountability and professional support to anyone who is self-employed and wants to learn how to handle their own bookkeeping – including managing their own Making Tax Digital quarterly updates, if relevant.
Your accountant is likely to be the best place for you to get support for Making Tax Digital – but, if your accountant doesn’t offer bookkeeping training or software support, Springreach Training & Coaching can help you learn how to do your own bookkeeping throughout the year. You can then do your own quarterly updates and only use your accountant at the end of the year.
If you are interested in submitting your own quarterly Making Tax Digital updates to HMRC and would like no commitment shared access to a qualified accountant to guide and support you, even if only temporarily until you get the hang of it, you might be interested in joining the Springreach DIY Bookkeeping Community, which opens its doors for the first time on 6th April 2026.
We’re offering a founder member rate of £15 per month to the first 10 people who sign up. Founder members retain the preferential rate for as long as they remain a member. The regular price will £25 per month. No commitment, cancel any time. If you’re interested in joining, please take a look at the Community page on our website. It would be great to welcome you on board!