• Making Tax Digital for VAT - Guide

 

What is Making Tax Digital?

Making Tax Digital, or MTD, is HMRC's solution to simplifying tax. By digitising the process the UK government wants to transform the way we do our taxes, making it more effective, more efficient and easier to get it right.

 

What do I have to do for Making Tax Digital?

To comply with MTD you must keep digital records. This needs to be done using what HMRC calls 'functional compatible software', similar to those I use, Quickbooks or Xero.

To guide you through MTD and what you as a business owner needs to do next, contact your accountant or bookkeeper.

 

How do I sign up for Making Tax Digital?

If you are eligible for MTD for IT, it is advised that you get yourself signed up with HMRC before the scheme becomes mandated.

From April 2026, MTD for IT applies to self-employed businesses and landlords with gross annual business income and/or property income above £50,000.

In many cases your accountant or bookkeeper may be able to sign you up, and they will be able to talk you through the steps and give you all the information you need.

How long after the end of a quarter do you have to submit the information?

Quarterly updates must be submitted within about 1 month (technically 1 month + 7 days if calendar quarters) following each quarter-end. For example, if the quarter ends on 5th July, the update must be submitted by 7th August.

You can choose between using:

• The default tax year quarters (6th April - 5th July, 6th July - 5th October, etc.)
• Calendar quarters (1st April - 30th June, 1st July - 30th September, etc.)

 

Do I need to make quarterly tax payments?

No. There is no change to the payments and deadlines. Tax remains payable under the usual Self Assessment due dates.

Who can be exempt from MTD for Income Tax

HMRC may exempt taxpayers who cannot engage digitally due to:

• Disability
• Locations (e.g. no reliable internet access)
• Incompatible religious beliefs

If your circumstances change (e.g. you get reliable internet), then you must notify HMRC and will then likely come under MTD for the next relevant tax year.

The following groups will not be required to use MTD for Income Tax:

• Customers who have a Power of Attorney
• Non-UK resident foreign entertainers and sports people who have no other income sources that count as qualifying income for MTD
• Customers for whom HMRC cannot provide a digital service.

Additionally, individuals will not be required to use MTD until April 2027 if they have information that they would need to submit using the SA109 schedule (residence, remittance basis).

The following groups will not be required to join MTD for Income Tax over the course of this Parliament:

• Ministers of religion
• Lloyd's Underwriters
• Recipients of the Marries Couples' allowance
• Recipients of the Blind Persons' Allowance

 

If I'm non-UK domiciled or non-resident, do I have to include my foreign businesses in MTD?

If you're not UK-domiciled or not UK resident for a particular tax year, your foreign businesses are generally excluded from MTD for Income Tax. However, any UK-based business or rental income above the threshold would still require MTD for Income Tax.

 

To find out if you need to register for MTD for IT, use the Gov.uk Guide.

 

For more details or to book a personal chat, use my Contact Form and give me some details of your business.