HMRC's Making Tax Digital (MTD) programme is the biggest change to UK tax administration in a generation. Since April 2024, all self-employed individuals and landlords with income over £50,000 must keep digital records and submit quarterly updates. By 2026, this threshold drops to £30,000.
What MTD Requires
- Digital record keeping for all business income and expenses
- Quarterly submissions to HMRC via compatible software
- A final end-of-period statement and tax return
- Use of MTD-compatible software throughout the process
The Compliance Challenge
For many small businesses and sole traders, MTD represents a significant shift. Paper records and annual filing are no longer sufficient. The risk of non-compliance penalties makes it essential to get this right.
Common Compliance Pitfalls
- Failing to categorise transactions correctly for quarterly reporting
- Missing the quarterly submission deadlines
- Inconsistencies between quarterly updates and the annual return
- Incomplete digital records that don't meet HMRC's standards
How AI Makes MTD Effortless
Automated Record Keeping: AI continuously categorises transactions as they flow through your bank account, maintaining HMRC-compliant digital records without manual data entry.
Smart Quarterly Submissions: AI aggregates your financial data, identifies any gaps or inconsistencies, and prepares quarterly submissions that align perfectly with HMRC's requirements.
Proactive Error Detection: Before each submission, AI validates your records against HMRC rules — catching categorisation errors, missing data, and calculation mistakes before they become compliance issues.
Year-End Reconciliation: AI ensures your quarterly submissions reconcile with your annual return, preventing the discrepancies that trigger HMRC enquiries.
The Cogno AI Approach
Our DIY Tax Return platform is built for the MTD era. By combining Open Banking data feeds with AI-powered categorisation and validation, we make quarterly compliance as simple as reviewing and submitting — no bookkeeping expertise required.
MTD doesn't have to be a burden. With the right AI tools, it becomes an opportunity for better financial visibility and easier tax filing.