Making Tax Digital: what you'll actually have to do
You may have heard that Making Tax Digital (MTD) means reporting to HMRC five times a year instead of once, and if that sounds like five times the work, it's easy to see why people worry.
The reality is much gentler than the headline. Here's exactly what changes, in plain English.
One tax return becomes a few quick check-ins
Right now, you do one Self Assessment tax return a year: the big January job.
Under MTD, that's replaced by:
- four short updates through the year (one every three months), and
- one final wrap-up at the end.
The important word is short. A quarterly update is nothing like a tax return. It's a quick summary of your income and expenses for those three months, sent straight from your software in a few clicks.
What's actually in a quarterly update?
Just your totals. How much came in, and what you spent, grouped into simple categories like travel or materials.
That's it. You're not working out your tax. You're not claiming anything. You're not doing any clever accounting. You're simply showing HMRC the raw numbers for the quarter.
A few things that make this easier than it sounds:
- Each update builds on the last. The figures are cumulative. You send the running total for the year so far, not just that one quarter on its own. Every update includes everything from the start of the tax year up to that point.
- Mistakes are easy to fix. Because each update carries the year-to-date total, you don't have to go back and correct an earlier one. If a figure changes, or a late invoice turns up, it simply flows into your next update.
- Estimates are allowed. If something isn't final yet, say a bill hasn't arrived, a sensible estimate is fine, and you tidy it up later.
When are the deadlines?
Each update is due about a month after its three-month period ends. That means four dates spread through the year, in August, November, February and May.
There's also a small choice in how those three-month periods are lined up. They can follow either:
- the tax year: quarters starting on 6 April, 6 July, 6 October and 6 January, or
- the calendar: quarters starting on 1 April, July, October and January.
It makes very little practical difference - the deadlines stay the same either way. It's simply about which lines up more neatly with your records, and it's the sort of small setup choice we'd sort out for you.
And the final wrap-up?
At the end of the year you do one last step, called a Final Declaration. This is where everything gets finalised - your allowances and reliefs are added, along with any other income such as a wage or pension - and your actual tax bill is worked out.
It replaces your old tax return, and it's due on the same date you already know: 31 January.
So the whole year looks like this: four quick check-ins, then one proper finish.
Does this change when I pay my tax?
No, and this is the part that reassures most people. MTD changes how often you report, not when you pay or how much.
Your tax is still due on 31 January (and 31 July, if you make payments on account), exactly as now. The quarterly updates don't create any extra bills along the way. They're just information for HMRC.
So is it more work, or not?
For most people, once it's set up, it's surprisingly little, and it can actually make life easier.
Think of it this way: instead of one nerve-wracking scramble every January, trying to piece together a whole year from a carrier bag of receipts, you keep things tidy as you go. Little and often. A lot of people find that far less stressful than the annual panic, and you always have a rough idea of where you stand.
Not sure where this leaves you?
If you'd like to know whether MTD affects you, and when, the easiest first step is a quick, no-pressure chat.
And if you'd like a hand from there, getting you set up and looking after the quarterly updates for you is exactly the kind of work we take on, so the whole thing becomes our job, not another item on your to-do list.
We're a small, friendly bookkeeping practice based in Stoke-on-Trent, helping sole traders feel calm and in control of exactly this sort of thing.
Small Business, Big Support.
👉 Get in touch for a no-pressure chat about where you stand.