Making Tax Digital is a deal right now. If you are a trader and a landlord, you have to keep track of your income and expenses and provide its update to HMRC. Making Tax Digital initiative was launched by the UK government to stop traditional paper record-keeping and start digital record-keeping. For Making Tax Digital, you need to use software that is HMRC-compliant.
Whether to keep an accountant for Making Tax Digital depends on how complicated your finances are and what kind of accounting system you use. Making Tax Digital is a way of keeping your income and expenses records in error-free digital records.
What is Making Tax Digital?
This is an initiative started by the UK government, led by HMRC, for digital record-keeping of finances. From 6 April 2026, sole traders and landlords must use it if their income from self-assessment and property is more than € 50,000.
Making Tax Digital modernises the tax system by requiring the submission of financial records and quarterly updates to HMRC using compatible software.
Why You Might Need An Accountant For Making Tax Digital?
You do not always need an accountant for MTD, but the accountant helps you to maintain error-free and hassle-free digital records by using MTD compatible software.
Benefits of keeping an accountant:
- Maintains error-free records of the finances.
- Saves your time from the administration role.
- Ensures that the software complies with HMRC.
- Helps to migrate data from current traditional paper filings and spreadsheets to digital records with no errors.
There do exist businesses that can handle MTD independently, and there also exist businesses that benefit from professional support.
| Businesses that can manage MTD independently | Businesses that benefit from professional support |
| · Small businesses with a low volume of transactions.
· Businesses already using software that complies with HMRC. · Businesses having enough time to check records to avoid errors.
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· Large businesses having multiple sources of revenue.
· Businesses that are moving from paper record keeping and spreadsheets to digital record keeping. · Businesses that don’t have enough time to manage financial records. · Businesses who wants best MTD compatible software for financial records. |
How Does Lexarox Accounts Handle MTD On Your Behalf?
Lexarox Accounts performs some specific tasks for MTD:
- The team first reviews the current accounting system and checks if the system is HMRC-compliant or not. If not, then it suggests the required changes.
- Helps to choose the software that is compliant with HMRC and fits the business needs and the budget.
- Registers your business with MTD if it is not registered to ensure that you are registered to the correct MTD service and your accounting software is connected to HMRC.
- The team transfers the financial data from paper records and spreadsheets to digital records while ensuring the missing, duplicate and incorrect information.
- The team sets up the digital record-keeping by setting up VAT and correct tax data and establishes software that complies with HMRC.
- They help the businesses to keep organised throughout the year by meeting payment deadlines and sending quarterly updates.
- They minimise the risk of penalties by checking the errors and VAT codes before submission.
- They give you advice on choosing the best software for your business and on tax planning.
How Long Does An MTD Conversion Take?
The time consumed for a Making Tax Digital conversion depends on various factors like-
- The size of your business and the number of your revenue sources.
- The existing accounting software you are using for keeping your records.
- Complexity of the accounts because of income sources and expenditure.
- Quality of the data you have.
Based on the analysis published in Hamptons: The Home Experts, the approximate timeline for the registration of your business for MTD to join HMRC’s scheme might take from 12 to 18 months.
Penalty System on MTD by HMRC
Making Tax Digital is modernising the traditional accounting system, and to ensure the timely submission of the records and payments, HMRC has introduced a point-based penalty system.
This is introduced so that further costly mistakes can be avoided. Under this system, a penalty isn’t applicable if you if you have missed the submission date once, but if you are continuously missing the submission dates, then it can cost you penalties.
Here’s a description of points that can make you eligible for penalties.
| Type of Submission | Point Limit | Penalty Amount | Period to reset |
| Quarterly Submission | 4 Points | £200 | Annual MTD compliance support |
| Annual Submission | 2 Points | £200 | Biennial MTD compliance support |
The points information is verified from the report of Hamptons. So each missing submission ads to a point.
Want To Know The Reasons Why Your Business Needs An Accountant For Making Tax Digital?
- You have multiple revenue sources
Handling multiple sources of income and managing them while keeping their records is a time-consuming process and might add to financial complexity, so an accountant would handle those complexities efficiently.
- You are new to MTD
If you are registering on MTD led by HMRC for the first time, then it might be confusing for you to decide MTD compatible software for your business, as there are multiple software options out there. An accountant will suggest the best software according to the needs of your business.
- You want error-free financial records
If you have faced errors in your records and tax submission in past, you need to appoint an accountant to avoid duplicate, incorrect and missing information and to avoid any further errors.
- You don’t have enough time
When you have a large-sized business, you have multiple responsibilities like business growth, task completion, and payroll responsibilities. An accountant can handle all the accounting responsibilities like payrolls, pensions, and tax payments so that you can focus on your business growth.
Conclusion
MTD conversion is an efficient initiative led by the UK government to organise the tax system and financial records. Although some businesses can manage the process of MTD conversion themselves due to the favourable conditions for them, it is important to seek expert advice and assistance in this process to avoid delays, errors and to reduce risk. This will also help to save your time and will make the MTD conversion process hassle-free.
Lexarox Accounts help you in managing Making Tax Digital for your business. Let Lexarox Accounts handle your MTD compliance, digital record-keeping, and tax submissions with ease. Contact our team today for expert support.
Lexarox Accounts
Contact Details: 0792 883 0368 | 0747 235 6282
Telephone number: 0208 533 1358
Email: info@lexaroxaccounts.co.uk
Address: Lexarox Accounts MS.128, 203-213 Mare Street, Hackney, London, E8 3JS
Frequently Asked Questions
1). What is an MTD conversion?
MTD conversion is a process of converting your traditional paper filing records and spreadsheets to digital record-keeping of finances.
2). Who started this MTD conversion?
MTD conversion is a Making Tax Digital initiative led by HMRC under the UK government.
3). Do I really need an accountant for MTD?
The answer completely depends upon the type of business and income source you have. IF you have multiple revenue sources and a large business, then you definitely need an accountant for management.
4). Can I manage MTD conversion myself?
If you have a small business, a single source of revenue and have already used MTD software earlier, then you can surely handle the process yourself.
5). How much time a MTD conversion process take?
The process can take around 12 to 18 months if you are starting registration from scratch.
6). Which software is best for MTD conversion?
You should use software that supports your needs, like submission of updates and tax returns to HMRC and supports your income sources for MTD. You can choose the software that meets your needs.
7). Can I transfer all my existing records to MTD software?
Yes. You can transfer the existing records from paper filings and spreadsheets to digital MTD compatible software. If you find complexity doing it yourself, you can go for a professional to seek help.
