Making Tax Digital

What you need to know

Making Tax Digital (MTD) is a Government initiative aimed at making the tax system more efficient and effective. It requires taxpayers to use a secure online tax account to register, file, pay, and update tax information digitally. Non-compliance may result in fines or penalties.

MTD for VAT

All VAT-registered businesses are now automatically enrolled in MTD for VAT. If your business is VAT-registered, you must use compatible software to maintain digital VAT records and file VAT returns quarterly.

MTD for Income Tax

MTD for Income Tax Self-Assessment (ITSA) has been delayed until April 2026. Self-employed individuals and landlords with an income over £50,000 will need to comply first, followed by those earning over £30,000 in 2027.

MTD for Corporation Tax

HMRC plans to introduce MTD for Corporation Tax in 2026. The system is still under development, with a pilot programme expected before it becomes mandatory.

MTD-Compatible Software

If your accounting software is MTD-compatible, you can file VAT returns directly with HMRC and receive confirmation. Our Cloud Accounting team can help you find the right software for your business and guide you through the transition.

Next steps for businesses

As the deadlines for Making Tax Digital approach, businesses must prepare by adopting compatible cloud accounting software and adjusting their processes for recording and reporting tax information.