If you’re a CIS worker, sole trader or self-employed individual in the UK, you may need to complete your first digital tax return as part of HMRC’s Making Tax Digital (MTD) scheme.
The idea of filing online can feel overwhelming, but with the right preparation, the process is simple. This guide breaks down each stage into clear steps so you can stay compliant, avoid mistakes, and focus on your business.
What is a digital tax return?
A digital tax return is an online submission made through HMRC’s Making Tax Digital system. Instead of filling in paper forms, you use HMRC-approved software to keep records and send updates directly to HMRC.
This is designed to make the tax system more efficient, reduce errors, and ensure UK taxpayers meet their obligations on time.
Step 1: Register and prepare
Before you can submit a digital return, you’ll need to:
- Register for Making Tax Digital (MTD) with HMRC
- Set up a Government Gateway ID
- Select HMRC-approved accounting software (e.g., QuickBooks, Xero, or bridging software)
Tip: If you’re unsure which software is best for your business, Tax2U can help you choose and set it up correctly.
Step 2: Keep digital records
Under MTD rules, you must keep accurate records of your business income and expenses in digital form.
Here’s what to include:
- Income – invoices, CIS statements, sales
- Allowable expenses – travel, tools, equipment, office costs
- VAT records – if you’re VAT-registered
No more paper folders or shoeboxes of receipts – everything must be recorded digitally.
Step 3: Submit your return online
When it’s time to file, your chosen software will prepare your digital self assessment tax return and send it securely to HMRC.
Quick submission checklist:
- Confirm all income has been entered correctly
- Match CIS statements with payments received
- Double-check expenses are allowable and accurate
- Reconcile your bank statements with records
Once submitted, you’ll receive confirmation from HMRC that your return has been successfully filed.
Digital vs Traditional tax returns
Here’s a quick comparison of how digital filing differs from the old paper-based approach:
| Feature | Traditional Tax Return | Digital Tax Return (MTD) |
|---|---|---|
| Submission method | Paper forms / online portal | HMRC-approved software |
| Record-keeping | Manual, paper-based | Digital, real-time |
| Error risk | Higher | Lower (auto-checks) |
| HMRC compliance | Basic | MTD-compliant |
| Speed & efficiency | Slower | Faster |
Common mistakes to avoid
- Leaving registration until the last minute
- Not choosing HMRC-approved software
- Forgetting to claim allowable expenses
- Submitting without checking CIS deductions
Avoiding these mistakes helps prevent delays, penalties, and stress.
How Tax2u can help
At Tax2u, we understand that many sole traders and CIS workers don’t have the time (or patience) to deal with tax paperwork. That’s why we handle the process for you:
- MTD registration and setup
- Digital record-keeping support
- Filing your tax return correctly and on time
We make digital tax simple, so you can focus on earning – not worrying about HMRC.
Get started today
Don’t let your first digital tax return catch you off guard. With Tax2u, you’ll have expert help to guide you through every step.
Contact Tax2u today and let us handle your digital self assessment tax return.