Definition
Making Tax Digital (MTD) is HMRC's programme requiring businesses to keep digital records and send their tax information to HMRC using compatible software. It applies to VAT now and to Income Tax in stages from April 2026.
MTD for VAT
Every VAT-registered business must keep its VAT records digitally and file its VAT Returns through Making Tax Digital compatible software. Returns can no longer be typed into HMRC’s website.
MTD for Income Tax
Sole traders and landlords join according to their qualifying income: their total gross income from self-employment and property, before expenses.
| From | Qualifying income over |
|---|---|
| 6 April 2026 | £50,000 |
| 6 April 2027 | £30,000 |
| 6 April 2028 | £20,000 |
What it requires
- Digital records of business income and expenses.
- A quarterly update to HMRC for each business.
- A final declaration by 31 January after the tax year, in place of the Self Assessment return.
Read more: Making Tax Digital for Income Tax in Tax Optimiser and Getting started with VAT.