How Making Tax Digital Works

If you've heard about Making Tax Digital (MTD) and you're not sure what it means for you, you're in the right place. This page is written for sole traders and self-employed people who do their own books and just want a straight answer. No accountant-speak.

Looking for a higher-level overview of MTD and the software side? See our Making Tax Digital for Sole Traders page. This guide is the operational walkthrough: what you actually do, week by week, quarter by quarter.

1. What is Making Tax Digital?

Making Tax Digital (or MTD for short) is HMRC's plan to move tax record-keeping out of paper notebooks, spreadsheets and Word documents, and into proper accounting software.

The version you've probably heard about is called Making Tax Digital for Income Tax, sometimes shortened to MTD ITSA. (ITSA stands for Income Tax Self Assessment, which is the official name of the tax return sole traders fill in.)

Under MTD, three things change:

• You have to keep your records digitally — no shoebox of receipts, no hand-written ledger.
• You have to send HMRC a short summary of your income and expenses every three months.
• You have to do all of this through MTD-compatible software — you can't just log in to the gov.uk website and type it in.

Keepr is Making Tax Digital software that files self-employment income directly to HMRC, so the third point is sorted as soon as you sign up.

2. Do I have to do this?

It depends on your income. HMRC is rolling MTD out in stages:

• From April 2026: Mandatory if your combined self-employment and property income is over £50,000 a year.
• From April 2027: Mandatory if your combined self-employment and property income is over £30,000 a year.
• From April 2028: Mandatory if your combined self-employment and property income is over £20,000 a year.

The income figure HMRC looks at is your turnover — that's the total money coming in from your business before you take off any expenses. So if you invoice £55,000 in a year and spend £15,000 on costs, your turnover is £55,000, not £40,000.

If you're a limited company director, MTD ITSA does not apply to you. Your company's accounts are handled differently. You only need to worry about MTD ITSA for any personal self-employment income on top of your salary.

3. What changes for me?

If you currently do one annual self-assessment in January, here's the difference:

Before MTD

• Keep records however you like
• One tax return per year, by 31 January
• Done

With MTD

• Keep records digitally in software like Keepr
• Submit a summary every three months (four submissions a year)
• Send a "final declaration" at the end of the year that wraps everything up

It sounds like more work, but in practice it's less stressful. Each quarterly submission is just a few totals: turnover and expenses, that's it. If you're already using Keepr to track your income and expenses, the totals are calculated for you. You click "submit" and it's done in under a minute.

4. What do I actually have to do?

For each three-month period (called a "quarter"), you need to:

1. Record your income and expenses as you go. Type them into Keepr, import them from your bank, or add them when you raise an invoice. The point is they're recorded somewhere digital, not on paper.
2. Review and submit your quarterly update. Keepr adds up your totals and sends them to HMRC at the click of a button.
3. At the end of the tax year, do a final declaration. This is your equivalent of the old self-assessment. You confirm everything is correct, add anything else (like savings interest), and submit.

That's the whole job. You do steps 1 and 2 four times a year, then step 3 once.

5. How Keepr helps

Keepr is built to take the worry out of MTD. Here's what it does for you:

• Connects to HMRC for you. A few clicks to authorise the connection and that's it. Nothing technical to set up.
• Calculates your quarterly figures automatically from the income and expenses you've already recorded. Nothing to copy across by hand.
• Shows you a preview before you submit. You always see exactly what's going to HMRC.
• Tracks your obligations. Keepr knows when each quarterly submission is due and shows you what's coming up.
• Keeps a permanent record. Every submission is logged so you can look back at what was sent and when.
• Handles the final declaration too. Same flow, one click.

6. Getting started in 5 steps

1. Sign up to Keepr (it's free) and add some of your income and expenses to get a feel for it.
2. Get into the rhythm of recording things week by week so quarter-end isn't a scramble.
3. Go to the Tax page in your sidebar and click Connect HMRC Account. You'll be sent to HMRC's website to log in and authorise Keepr. This is HMRC's standard process and it's safe.
4. Enter your National Insurance number when asked. (HMRC uses this to find your tax record.)
5. You're connected. Keepr will show you any quarterly submissions coming up and you can submit them when you're ready.

7. Deadlines and dates

The UK tax year runs from 6 April to 5 April. Quarterly submissions are due about a month after each quarter ends:

• Quarter 1: 6 April – 5 July, due by 7 August
• Quarter 2: 6 July – 5 October, due by 7 November
• Quarter 3: 6 October – 5 January, due by 7 February
• Quarter 4: 6 January – 5 April, due by 7 May
• Final declaration: due by 31 January the following year (same as the old self-assessment deadline)

Keepr will remind you in the app when a deadline is coming up, so you don't have to memorise these.

8. What if I make a mistake?

Mistakes happen. Good news: MTD is designed for this.

Each quarterly submission is cumulative, which means each one replaces the last. So if you forgot a £200 expense in Q1, you don't have to phone HMRC. You just add it to Keepr and the next quarterly submission will have the corrected total. HMRC sees the new figure and updates their records.

If you spot a mistake after your final declaration, you can submit an amendment, and Keepr handles that too.

9. How much does it cost?

Nothing. MTD is included on the Keepr Free plan, with no usage limits, no hidden fees, and no time limit.

HMRC asked software providers to make sure people with simple tax affairs can comply with MTD without paying for software, and we agree with that. You can use Keepr Free to handle your entire MTD year without ever upgrading to Pro: quarterly submissions, final declaration, the lot. We make our money on Pro plans (for people who want extra automation features) and on a small fee on card payments through Stripe Connect, not on charging you to file your tax.

You can read the binding commitment in our Terms & Conditions.

10. Where to get help

If something doesn't work or you're not sure what to do, here's where to look:

• Keepr's FAQ page — common questions about Keepr and MTD.
• The Making Tax Digital for Sole Traders page: high-level overview, deadlines table, comparison vs spreadsheets, and FAQ.
• Email us at info@keepr.co.uk. We read every message.
• HMRC's official guidance on Making Tax Digital for Income Tax: gov.uk: MTD for Income Tax (main hub), or the more targeted check if you need to use MTD.
• If you're unsure about your tax situation, please talk to a qualified accountant. Keepr is great at the software side, but we can't give tax advice.

This guide explains the practical side of MTD in plain language. It is not tax advice and Keepr is not an accountancy firm. If you have questions about your specific tax situation, please speak to a qualified accountant.