Making Tax Digital: How Cloud Accounting Can Simplify Your Finances

The UK’s tax system is undergoing a significant transformation with the phased implementation of Making Tax Digital (MTD) for Income Tax Self Assessment (ITSA). This initiative aims to modernise tax administration, making it more effective, efficient and easier for taxpayers to get their tax right.

When will MTD for ITSA come into effect?

• April 2026: Self-employed individuals and landlords with annual incomes exceeding £50,000 will be required to keep digital records and submit quarterly updates to HMRC using MTD-compatible cloud accounting software.
• April 2027: The MTD requirements will extend to those with annual incomes between £30,000 and £50,000.
• Most customers will be able to join MTD for ITSA voluntarily beforehand, meaning they can eliminate common errors and save time managing their tax affairs before the initiative becomes mandated.

Understanding MTD for ITSA

When the Making Tax Digital for ITSA initiative begins, affected taxpayers must:

• Maintain digital records – Use cloud accounting software to record income and expenses.
• Submit quarterly updates – Provide HMRC with updates every three months, summarising business income and expenditures.
• Finalise annual tax position – After the tax year ends, confirm and adjust figures in a final declaration.

Benefits of Making Tax Digital

• Accuracy: Digital records reduce errors associated with manual bookkeeping.
• Efficiency: Cloud accounting solutions streamline processes, saving you time.
• Real-time tax position: Quarterly updates provide a clearer picture of tax liabilities.

Businesses already operating MTD are reporting time saved, reductions in input errors and increased confidence in managing their tax affairs. 

How Monies online accountants can help you

At Monies, our expert online accountants are here to support you through this transition. We can:

• Assess your readiness – Determine how Making Tax Digital applies to you and advise you on the best next steps for your business based on the MTD thresholds.
• Recommend suitable cloud accounting software – Help you choose the right digital tools for your business. At Monies we are all Xero certified and QuickBooks Pro advisors so have all the tools ready at our disposal to help streamline and grow your business.
• Provide advice and support – Our team of tech-savvy experts can help you and your team adapt seamlessly to Making Tax Digital with our clear, jargon-free advice and support.
• Ensure compliance – Manage the quarterly submissions and final tax declarations for your business, submitting detailed reporting to meet regulatory deadlines and minimise the stress of endless forms and declarations.

Our advice? Embrace Making Tax Digital early

Ensure your business is ready for the future. At Monies, we will streamline the process with expert guidance and cloud accounting solutions designed to simplify your finances.

Get in touch with us today to future-proof your tax management.

For more detailed information, refer to the official HMRC guidelines on MTD for ITSA.