Is Your Business Ready for Making Tax Digital? Here's How to Stay Ahead

Ryan Heaphy
May 22
2 min read

What is Making Tax Digital?

Making Tax Digital is HMRC’s initiative to move tax reporting fully online. That means:

Digital record keeping (no more paper spreadsheets),
Tax submissions via HMRC-approved software, and
More frequent updates to HMRC instead of one big tax return at year-end.

Right now, all VAT-registered businesses must follow Making Tax Digital rules. Coming up next: Self-employed business owners and landlords earning over £50,000 will need to join from April 2026. Those earning £30,000 or more will follow in 2027.

So… How Are Other Small Businesses Preparing?

Here’s what smart SMEs are doing right now to get ready for Making Tax Digital:

✅ Switching to Making Tax Digital-Compatible Software

Many businesses are ditching manual spreadsheets and moving to user-friendly platforms like Xero, QuickBooks, Sage, or FreeAgent. These tools don’t just help with compliance. They save you time and give you real-time insight into your cash flow.

✅ Leaning on Their Accountant

Now is the time to talk to your accountant. The best advisors aren’t just helping you stay legal. They’re actively guiding clients through software setup, digital records, and planning for quarterly tax submissions.

✅ Automating Wherever Possible

From sending invoices to tracking expenses and reconciling bank statements, automation reduces human error and lightens your admin load. It also keeps your books tidy, so when tax time comes, you’re not scrambling.

✅ Training Teams and Upskilling

If someone on your team handles finance, make sure they understand Making Tax Digital and the tools you're using. A little training now can prevent costly mistakes later.

✅ Cleaning Up Their Records

Making Tax Digital means HMRC expects clean, connected digital records. That includes reviewing how you store and track data, and making sure there are no gaps between your invoices, bank feeds, and tax returns.

Common Hurdles (And How to Get Past Them)

We get it. Change isn’t always easy. Here are a few challenges small businesses often face:

“We’re too small for all this tech.” Even the smallest businesses are included. The key is finding software that fits your size and budget.
“It’s confusing.” True, but your accountant can help make sense of it all. Don’t be afraid to ask questions.
“We’re not ready yet.” That’s okay. Starting now means you're not rushing when the deadline hits.

Final Thoughts: Don’t Just Comply, Thrive

Making Tax Digital isn’t just a box to tick. It’s a chance to modernise how your business handles money. With real-time financial data and less paperwork, you can make smarter decisions faster. That means more time to focus on growing your business.

The bottom line is this: the earlier you prepare, the smoother the transition.

Need help getting started?. We've also secured a fantastic discount with Xero for local businesses. Find out more here