How to become Making tax digital (MTD) compliant in one day (Step-by-Step Guide for 2026)

*This article has been updated to reflect the Making Tax Digital for Income Tax changes effective from April 2026.

The next major phase of Making Tax Digital (MTD) for Income Tax Self Assessment (ITSA) is now in force from 6 April 2026.

From April 2026, sole traders and landlords with gross income exceeding £50,000 are required to keep digital records, submit quarterly updates to HMRC, and complete a final year-end declaration. This marks a move away from the traditional annual Self Assessment process, bringing tax reporting closer to real time.

While this increases the need for accurate and up-to-date record keeping, the initial setup is relatively straightforward. By putting the right software in place and ensuring your records are properly organised, it is entirely possible to become MTD compliant in one day.

Here are 3 essential steps to becoming MTD compliant:

1. Check if MTD applies to you?

Does MTD apply to you? Many businesses are already required to comply under the VAT regime. If you are VAT-registered, you should already be:

• keeping digital records
• using MTD-compatible software
• submitting VAT returns to HMRC digitally

These requirements apply to all VAT-registered businesses, regardless of turnover. This also includes businesses that have voluntarily registered for VAT.

For Income Tax, from April 2026, MTD applies to sole traders and landlords with gross income exceeding £50,000. This includes income from self-employment, property, or a combination of both.

2. Sign up for Making Tax Digital (MTD)

Once you have established that your business is required to comply with Making Tax Digital, the next step is to register with HMRC. The process differs slightly depending on whether you are registering for VAT or Income Tax.

For VAT

HMRC now automatically signs up most new VAT-registered businesses for MTD as part of the registration process.

If you are already VAT-registered but have not yet moved to MTD, you should sign up as soon as possible to avoid potential penalties. You will need your Government Gateway user ID, password, and VAT registration number.

For Income Tax (MTD for ITSA)

If your qualifying income from self-employment or property exceeds £50,000, you are required to sign up. Unlike VAT, HMRC does not automatically enrol taxpayers into MTD for Income Tax. Registration must be completed manually through HMRC’s online services.

To complete the process, you will typically need:

• Your Government Gateway login details
• Your National Insurance number
• Your Unique Taxpayer Reference (UTR)
• The details of your MTD-compatible software

3. Get onto MTD-compatible software

MTD requires businesses to maintain digital records and submit returns using HMRC-recognised software.

This means that manual record-keeping alone is no longer sufficient unless supported by compatible bridging software. Most businesses therefore use cloud accounting platforms to manage records and submit returns efficiently.For VAT, submission deadlines and return periods remain unchanged. The information required is also consistent, but it must now be maintained and submitted digitally.

How to be MTD compliant may at first seem daunting, but the reality is that, by taking clear steps forward now, the solution is relatively straightforward. Where you would prefer not to be involved with MTD yourself, Ridgefield Consulting can offer a full bookkeeping and VAT return service in order to ensure your business complies. If you have any queries or require further information, please get in touch.