How to Prepare for Making Tax Digital MTD

How to prepare for Making Tax Digital (MTD) is a question that will become increasingly relevant for many self-employed individuals and landlords in the United Kingdom over the coming years. MTD is a reform of the tax system aimed at moving towards continuous digital record-keeping and regular reporting to the tax authority. Instead of submitting one annual tax return, there will be an obligation to record income and expenses digitally and submit quarterly updates through dedicated software that is directly connected to HM Revenue & Customs.
In practice, this means that if you are self-employed — for example, a construction worker, driver, or freelance specialist — or if you rent out property, your approach to bookkeeping will need to change. Until now, many people collected receipts throughout the year and in January tried to remember how much they earned and how much they spent. Under MTD, this method will no longer be suitable. Income and expenses must be entered on an ongoing basis, and the system will summarise the information and allow it to be submitted every three months.
Let us imagine a self-employed electrician. Each week he buys materials, pays for fuel, and receives payments from clients. Previously, he might have thrown all receipts into a drawer and tried to calculate everything at the end of the year. With the introduction of MTD, this approach becomes problematic. He now needs to record income and expenses regularly in a digital system. This can be done once a week or once a month, but the key point is not to leave everything until the last minute. When the quarterly reporting deadline arrives, the data is already prepared and only needs to be confirmed.
Another example is a landlord who owns one or two flats. Previously, rental income could be written down in a notebook, and repair expenses recalled from bank statements. Under MTD, such bookkeeping becomes insufficient because digital records are required. Rental income, letting agent fees, insurance, and repairs all need to be entered into the system. As a result, at the end of each quarter the landlord can clearly see whether the activity is profitable and no longer has to guess how much tax will be due at the end of the year.
One of the most important preparation steps is choosing suitable software. It becomes the main tool in daily operations. For example, a small business owner who receives several invoices each day can use an app on their phone: they photograph a receipt, and the system automatically extracts the amount and categorises it as an expense. After a few months, they have a clear financial history without manual calculations. This not only helps comply with MTD requirements but also provides a better understanding of the business.
An equally important step is official registration for the MTD system. A common mistake is assuming that having software is enough. In reality, you must separately confirm that from a specific date you will submit reports under MTD rules. For example, a person might start using digital bookkeeping but forget to register. When the time comes to submit the quarterly update, the system will not allow it, which can cause delays and additional complications.
For many people, these changes create anxiety, especially if bookkeeping has not been their strongest skill. In such cases, it is important to remember that seeking help is completely normal. Self-employed individuals and landlords can contact ZipTax Ltd, which helps clients prepare for Making Tax Digital, choose the right solution, organise their bookkeeping, and ensure everything is completed correctly and on time. This is particularly useful for those who want to focus on their work rather than deal with technical tax details.