Making Tax Digital (MTD) for Income Tax can feel a bit like one of those acronyms everyone nods along to, while secretly hoping someone else explains it first. That’s exactly where !Coconut comes in, taking the confusion out of tax and turning it into something you can actually stay on top of. The good news? Once you break it down, it’s far less scary than it sounds.
With quarterly reporting becoming the norm and each MTD deadline coming round quicker than you think, now’s the time to get your business set up properly. This guide walks you through it step by step, without the headache.
Step 1: Understand what MTD means for your business
At its core, Making Tax Digital is HMRC’s push to move tax reporting fully online. Instead of one annual scramble, businesses need to:
- Keep digital records
- Submit updates to HMRC every quarter
- Meet each MTD deadline using MTD-compatible software
If you’re VAT registered, you’re probably already living the MTD life. Income Tax Self Assessment is next, so even if it feels a way off, preparation now will save a lot of stress later.
Step 2: Know your MTD deadlines
MTD isn’t flexible when it comes to dates. Each quarter has its own MTD deadline and missing one can mean penalties. Not ideal.
Quarterly submissions are usually due one month and a few days after the end of each period. The exact dates depend on your setup, but the key takeaway is this… there’s no ‘I’ll deal with it later’ anymore. Make sure to put every MTD deadline in your calendar now. Future you will be very grateful.
With quarterly reporting becoming the norm and each MTD deadline coming round quicker than you think, having the right tools makes all the difference. !Coconut is designed specifically for small businesses and sole traders, helping you stay organised without drowning in admin.
Step 3: Get your records fully digital
If you’re still juggling spreadsheets, paper receipts and invoices, this is the moment to change that.
MTD requires:
- Digital income and expense records
- A clear audit trail
- Software that links directly to HMRC
This doesn’t mean you need to become a spreadsheet wizard overnight. !Coconut automatically categorises your income and expenses, keeps everything digital and makes sure your records are always MTD-ready. It just means choosing a system that keeps everything tidy, up to date and ready for each MTD deadline.
Step 4: Choose MTD-compatible software
This is where life gets easier (promise). The right software does a lot of the heavy lifting for you and !Coconut is built to do exactly that:
- Tracks income and expenses automatically
- Keeps records MTD-compliant
- Reminds you when an MTD deadline is coming up
- Submits reports directly to HMRC
- Keeps everything aligned with the latest MTD rules and MTD deadline requirements
The aim isn’t to add another admin task to your list. It’s to reduce them.
Step 5: Get into the habit of quarterly check-ins
Quarterly reporting sounds intense, but it’s actually one of the hidden perks of MTD.
Instead of a once-a-year panic, you can:
- Spot issues earlier
- Understand your cash flow better
- Spread the workload across the year
A quick monthly or quarterly review using !Coconut means you’re never rushing to meet an MTD deadline at the last minute.
Step 6: Do a test run before the first MTD deadline
Before submitting your first MTD return, do a dry run. !Coconut makes this simple, with clear prompts and an easy-to-follow submission process.
Check that:
- All your records are accurate
- Your software is connected to HMRC
- You know how to submit a report
It’s much nicer to discover any hiccups before an actual MTD deadline is looming.
Step 7: Use the right support
MTD for Income Tax is about better reporting, not doing everything the hard way. !Coconut is designed to guide you through the process, keeping things clear and much less stressful.
From prompts and reminders to keeping everything aligned with each MTD deadline, having the right software support can make all the difference.
If something doesn’t look right or doesn’t make sense, it’s far better to check early than scramble later. HMRC would definitely prefer that to a missed MTD deadline.
Prepare once, relax every quarter
MTD isn’t going anywhere, but that doesn’t mean it has to take over your life. With the right setup, clear processes and a bit of forward planning, quarterly reporting becomes just another small task, not a looming threat.
Get prepared now with !Coconut, stay on top of every MTD deadline and you’ll spend far less time worrying about tax and far more time running your business.
