Question 1

What does an MTD setup actually involve?

Accepted Answer

Setting up for Making Tax Digital is a one-off project with four parts: choosing HMRC-recognised software that suits how you actually work, getting your records into it, connecting it to HMRC, and agreeing who files what from now on. In practice we start by looking at how you keep records today — spreadsheets, a shoebox, or an existing cloud package — then migrate your opening balances so the software starts from a correct position rather than a guess. We connect your bank feeds so transactions arrive automatically, authorise the software with HMRC, and set up agent authorisation so we can see the same submissions you do. The whole thing usually takes a couple of weeks of elapsed time, most of which is waiting on HMRC authorisation codes rather than work at your end.

Question 2

How long before my MTD start date should I get set up?

Accepted Answer

Aim to be fully set up at least one full quarter before your mandation date, and ideally two. The reason is not the setup work itself — it is that you want to run a live quarter while it does not count. Starting early lets you find the awkward parts of your business (mixed personal and business spending, cash takings, a bank feed that will not connect) at a point where a mistake costs nothing. It also spreads the load: HMRC authorisation codes arrive by post and can take a week or more, and if you leave everything to the month before your first deadline you will be doing your setup and your first submission at the same time. Businesses that start a quarter early almost always find their first real submission uneventful.

Question 3

Can I keep using my spreadsheets after MTD setup?

Accepted Answer

Yes, but they have to be digitally linked to HMRC rather than retyped into a form. Spreadsheets are still legitimate digital records — what MTD prohibits is manually copying a figure from one place to another. So a spreadsheet feeding bridging software through a formula, cell link or import is fine; opening HMRC's site and typing the total from your spreadsheet into a box is not. Honestly, though, we set most clients up on proper software instead. Bridging keeps your familiar spreadsheet but gives you none of MTD's upside — no bank feeds, no automatic categorisation, no running view of what you owe — while still leaving you doing the data entry. Bridging makes sense when a spreadsheet does something genuinely specific to your trade that software cannot replicate.

Question 4

What is a digital link and why does it matter at setup?

Accepted Answer

A digital link is any transfer of data between systems that happens without a human retyping or copy-pasting it. Formulas between spreadsheet cells, linked workbooks, CSV imports, API connections and bank feeds all count. Typing, copying and pasting do not. It matters at setup because digital links are where most compliance problems are designed in: if your till exports a sales total that someone keys into a bookkeeping package every Monday, you have built a break in the chain that will still be there at your first inspection. So a proper setup traces the whole path from where a transaction is first recorded to where it reaches HMRC and makes sure every hop is automated. The soft-landing period that once allowed copy-paste has long since ended.

Question 5

Which software should I choose for MTD?

Accepted Answer

The right answer depends on your trade far more than on feature comparisons. Any HMRC-recognised package will keep you compliant, so the question is which one you will actually keep up with. We generally point landlords towards software with strong per-property tracking, trades towards something with solid mobile receipt capture and CIS handling, and ecommerce sellers towards whatever integrates cleanly with their sales channel. Xero and QuickBooks cover most situations well and we set up both. What we would steer you away from is choosing on price alone: the cheapest tier often excludes the one feature your business depends on, and moving later costs more than the saving. We are not tied to any vendor and will tell you if your existing package is fine as it is.

Question 6

What does MTD setup cost?

Accepted Answer

Our setup work is quoted as a fixed fee once we have seen your records, and for most sole traders and landlords it is a few hundred pounds rather than a few thousand. The variables are how much history needs migrating and how tangled the starting position is — a landlord with three properties and clean bank statements is a very different job from a builder with four years of mixed personal and business spending on one account. Software is separate and billed by the vendor, though we can often get partner rates below list price. If you take us on for ongoing MTD support, setup is usually folded into the monthly fee rather than charged up front. You get the fee in writing before we start; we do not do open-ended hourly billing.

Question 7

Do I need to be MTD-registered if I am below the threshold?

Accepted Answer

No. MTD for Income Tax applies from April 2026 if your qualifying income is above £50,000, from April 2027 above £30,000, and from April 2028 above £20,000. Below the current threshold you carry on with a normal Self Assessment return. That said, watch the trajectory rather than just today's figure: the thresholds step down over three years, so a business at £35,000 today is outside MTD now, inside it in April 2027, and would be far better setting up calmly in advance than scrambling. Qualifying income is also gross, before expenses, which catches people out — a landlord with £32,000 of rent and a £24,000 mortgage is over the April 2027 threshold despite modest profit. Voluntary early setup is allowed and often sensible.

Question 8

Can you set me up part-way through a tax year?

Accepted Answer

Yes, and it is more common than starting on 6 April. Mid-year setup means we bring in your transactions from the start of the tax year so the software holds a complete year, not a partial one — otherwise your final declaration will not reconcile. Practically that means importing bank data back to 6 April, entering anything that did not go through the bank, and agreeing opening balances with whoever prepared your last accounts. If you are already mandated and have missed a quarterly update, we deal with that as part of the work rather than leaving you to explain the gap. The only genuinely awkward moment to start is a fortnight before a quarterly deadline, and even then we would usually file first and migrate after.

Question 9

Will you deal with HMRC authorisation for me?

Accepted Answer

Yes — we handle the agent authorisation and the software authorisation, but there are two steps only you can do. HMRC has to know that we act for you, which means either you approve a digital handshake through your own HMRC account or you enter a code HMRC posts to you. And the software has to be granted access to your HMRC record, which is a one-time sign-in you complete yourself. We walk you through both, usually on a screen share that takes about ten minutes. After that, submissions flow from the software and we can see exactly what HMRC has received. The posted code is the slow part — allow a week or so — which is the main reason we ask people not to leave setup to the last month.

Question 10

What if my business is exempt from MTD?

Accepted Answer

Genuine exemptions exist, but they are narrower than most people hope. HMRC grants digital exclusion where it is not reasonably practicable for you to use digital tools — because of age, disability, location without reliable internet, or religious belief. It is not an exemption to simply prefer paper, dislike computers, or find software confusing. Exemption must be applied for and granted; you cannot assume it. Where a client has a credible case we help prepare the application and evidence it properly, because a refused application still leaves you with a mandation date approaching. Where the case is weak we say so, and usually the better answer is a setup where we do the digital part and you keep doing what you have always done. Being exempt does not remove the duty to file.

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