Making Tax Digital is here. What it means if you still run on spreadsheets.

The tax return is no longer the whole job

If you are a sole trader or a landlord with more than £50,000 coming in, the rhythm of your tax year changed on 6 April 2026. One return in January became four updates a year plus a final declaration.

Most of the coverage of this has been written for accountants. This is the version for the person who actually keeps the records, which in a small business is usually the owner.

The short version is that the deadline is not the hard part. The hard part is where your numbers currently live.

What Making Tax Digital actually requires

Three things, and it is worth separating them because people tend to blur them together.

First, you keep your income and expense records digitally, in software rather than on paper or in a shoebox.

Second, you send HMRC a summary of those records four times a year through software that connects to them directly.

Third, you finish the year with a digital final declaration by 31 January, which replaces the return you are used to.

HMRC does not provide the software. You choose a compatible product from a third party, and a spreadsheet is still allowed as long as bridging software carries the figures across.

The dates that matter

The threshold is qualifying income, which means your turnover from self employment and property before you take any expenses off, taken from the return you filed for the previous year.

Above £50,000, you are in from 6 April 2026. Above £30,000, you join from April 2027. Above £20,000, from April 2028.

Quarterly updates are due on 7 August, 7 November, 7 February and 7 May. For anyone brought in this April, the first one falls on 7 August 2026, which is a fortnight away as this is published.

There is one piece of good news. HMRC will not apply penalty points for late quarterly updates during the first year, 2026 to 2027. Penalties for a late final return and for unpaid tax still apply exactly as before, so the grace is narrower than it sounds.

What it costs, honestly

HMRC's own estimate is a one off transitional cost of roughly £280 to £350 per business, then £110 to £115 a year to run.

The scrutiny of those figures has been less flattering. In February 2024 HMRC estimated that extending the scheme to income tax would impose transitional costs of more than £500 million on taxpayers, with ongoing costs exceeding ongoing savings by around £200 million a year, and professional bodies have consistently reported that real transition costs come in above the government's estimates.

Budget for more than the software licence. The licence is rarely the expensive part.

The real cost is the copying

Here is what the estimates do not capture, and what actually decides whether this is painless or miserable for you.

If your business already runs on one accounting product and everything flows into it, this change is close to trivial. You will click a few more buttons four times a year.

If your income arrives through a booking system, a card reader, an online shop and a bank account, and it becomes a set of numbers through someone typing them into a spreadsheet, then you have just quadrupled how often that typing has to happen.

That is the thing to look at now, because the work is the same whether you do it in April or in a panic the day before a deadline.

When off the shelf software is enough

Usually. This is worth saying plainly, because there is an entire industry with an interest in telling you otherwise.

If you have one income stream, a manageable number of transactions and a bank feed that categorises most of them, a mainstream accounting product will handle the whole obligation. Buy it, connect it, move on.

The same is true if your accountant already does your bookkeeping in their own system. Ask them what they are using and let them lead. Paying twice for two systems that disagree with each other is a genuinely common way to make this worse.

When a small custom tool pays for itself

There is a narrower case, and it is a real one.

You have data in a system that does not talk to your accounting software, and there is no plugin. A booking platform, an industry specific product, a supplier portal, or an ecommerce setup with quirks. Someone exports a file and reshapes it by hand every month.

At once a year, that was an annoying afternoon. At four times a year plus the year end, it becomes a recurring tax on your attention, and manual reshaping is where mistakes get made and then submitted.

A small piece of software that pulls from the source, applies your rules and produces the file your accounting product expects can be a modest build. Compared against several days a year of retyping, plus the cost of an error in a submission that now happens quarterly, it often pays back inside the first year.

The honest test is simple. If the copying takes you under an hour a quarter, do not build anything. If it takes a day, and it will still take a day next year, that is a problem worth solving once.

The quiet benefit nobody sells you

Everything above treats this as a cost, which is fair, because for most people it is one imposed on them.

There is a second order effect worth noticing though. A business that only assembles its numbers once a year is a business that finds out how the year went several months after the year ended.

Quarterly figures, produced properly rather than guessed at, tell you which months actually make money and which customers are quietly costing you. Plenty of owners discover something uncomfortable and useful the first time they look at that.

That is not a reason to be glad about the change. It is a reason, if you are going to do the work anyway, to set it up so the output is something you would actually read rather than a file that goes to HMRC and nowhere else.

What to do in the next month

Check whether you are actually in scope, using turnover before expenses rather than profit. Plenty of people who assume they are caught are not, and some who assume they are safe are not.

Then confirm your software is on HMRC's compatible list, and confirm it with the provider rather than with a comparison article.

Then do one dry run. Produce the numbers for a single quarter the way you intend to produce them every quarter, and time yourself. That number tells you everything about whether your current setup survives the next few years.

Finally, if you are near £30,000 rather than £50,000, remember your turn comes in April 2027. Solving it once now is cheaper than solving it twice.

If the copying is the problem

We build internal tools and automations for exactly this kind of work, the unglamorous jobs that eat a day and produce a file. Sometimes the honest answer is that your existing software already does it and nobody has switched the feature on, and we will happily tell you that.

Book a free 15 minute consultation or email info@kerenlabs.com , and bring an example of the file you keep rebuilding by hand.