Making Tax Digital requirements: what you must do

You must record your business income and expenses digitally — for each item, the date, amount and category. Paper records and manual ledgers no longer meet the requirement, though you can keep records in a spreadsheet if it connects to HMRC via bridging software.

Your records must be kept in, or connected to, software that HMRC recognises as MTD-compatible. HMRC publishes recognised-software lists for MTD for VAT and MTD for Income Tax. We can recommend and set up the right option for your business.

MTD software setup help →

There must be a digital trail from your source records to the figures you submit, with no manual re-typing or copy-pasting between systems. This is the “digital links” requirement, and it is central to being compliant — especially if you use spreadsheets.

For MTD for Income Tax you send HMRC four quarterly updates a year plus a year-end final declaration. For MTD for VAT you submit your VAT returns digitally on your usual dates. Either way, submissions go through the software, not via the old online portal.

Your first quarterly update →

MTD for VAT applies to all VAT-registered businesses now. MTD for Income Tax applies to sole traders and landlords with qualifying income over £50,000 from April 2026, £30,000 from 2027 and £20,000 from 2028. We can confirm whether — and when — it applies to you.

Check if MTD applies to you →