Making Tax Digital

Making Tax Digital (MTD) is an HMRC initiative to encourage businesses to keep their accounts up to date and in a digital format. MTD aims to help make tax admin more efficient.

Up to date accounts can help business owners keep better track of how their business is doing. It can also help in spotting any potential problems earlier on.

The MTD journey

Making Tax Digital covers VAT and, from April 2026, will extend to income tax self-assessment. Here’s a timeline of the government’s implementation plan:

• April 2022
  MTD for VAT applies to all VAT-registered businesses
  

• April 2026
  Self employed and property businesses earning over £50k will need to submit income tax self assessment returns through MTD for Income Tax
  

• April 2027
  MTD for Income Tax will apply to self employed and property businesses earning over £30k
  

• April 2028
  MTD for Income Tax will apply to self employed and property businesses earning over £20k

MTD for VAT

MTD for VAT is the first phase of Making Tax Digital. From 1 April 2022 all businesses registered for VAT were required to keep digital records, and to submit their VAT returns to HMRC using MTD compatible software.

Any business newly-registered for VAT is automatically enrolled for MTD. You don’t need to register for VAT unless your business’s annual turnover is above £90,000 per year, but you can voluntarily register if your turnover is under this threshold.

Read our guide to learn more on VAT and how to register.

MTD for Income Tax

Phase two will be MTD for Income Tax. From 6th April 2026, self-employed business owners and landlords with a total qualifying business or property income above £50,000 per year will have to follow MTD for Income Tax rules. It applies specifically to sole traders and landlords, and the rollout will happen in stages based on the total amount of business and property income. The annual self assessment tax return will be replaced by four quarterly submissions plus a final declaration to HMRC at the end of the tax year.

Self-employed business owners and landlords with qualifying income of more than £30,000 will have to follow the rules from April 2027, and those with qualifying income of more than £20,000 included from April 2028.

If you don’t sign up or fail to meet the MTD requirements, HMRC may issue late submission penalties or compliance notices, so it’s important to stay on top of deadlines once the rules apply to you.

For next steps and to find out more about how our HMRC-recognised tool can help you, head to our Making Tax Digital page.

This article is intended as general information only and does not constitute advice in any way. For any specific questions, you may want to consult a qualified accountant and/or tax advisor.