What is Making Tax Digital?
Making Tax Digital is HMRC’s programme to move business tax record-keeping and filing from paper and manual processes to digital systems connected directly to HMRC via API. Instead of typing figures into a Government Gateway form, your software handles submission automatically.
The requirement has two parts: keep business records digitally so software can read them, and have your software send returns and updates to HMRC without manual re-entry. MTD applies to different taxes through separate schemes, each with its own timeline.
What are the HMRC Making Tax Digital changes?
The changes amount to a complete replacement of how businesses report tax — moving from annual returns to quarterly digital submissions. Rollout has happened in stages and the timeline has shifted several times.
| Year | What happened |
|---|---|
| 2015 | HMRC announced the MTD programme |
| 2019 | MTD for VAT mandatory above VAT threshold |
| 2022 | MTD for VAT extended to all VAT-registered businesses |
| 2024 | MTD for Income Tax pilot opens; April 2026 confirmed |
| 2026 | MTD for Income Tax mandatory: qualifying income > £50,000 |
| TBC | MTD for Corporation Tax: no mandatory date set |
MTD for VAT: what businesses must do now
If your business is VAT-registered, MTD for VAT already applies. It became mandatory for all VAT-registered businesses on 1 April 2022 regardless of turnover. Compliance requires digital VAT records, digital links between systems, and submission via API.
If you are currently logging into the Government Gateway and typing in figures, you are not complying. HMRC’s approved software list covers both full accounting packages and bridging software.
What are the Making Tax Digital deadlines for Income Tax?
MTD for Income Tax applies to sole traders and landlords whose qualifying income exceeds a set threshold. The rollout is phased across three years:
| Qualifying income | Mandatory from |
|---|---|
| More than £50,000 | 6 April 2026 |
| More than £30,000 | 6 April 2027 |
| More than £20,000 | 6 April 2028 |
Qualifying income means combined self-employment and property income. Salary, dividends, pensions and savings interest do not count. HMRC writes to businesses it believes are in scope, but receiving no letter does not mean you are exempt — you are responsible for checking your position.
What does a quarterly MTD update involve?
A quarterly update is a summary of business income and expenses for a three-month period, submitted digitally through MTD software. No tax is due when you submit — it is a record-keeping submission, not a payment trigger.
Four updates per year cover roughly April-June, July-September, October-December and January-March. At year-end you complete a final declaration that consolidates the four summaries plus other income and calculates your liability. This replaces the annual Self Assessment return.
Where does MTD for Corporation Tax stand?
MTD for Corporation Tax is still in development. HMRC’s consultation closed in March 2021 and the government confirmed its intention to bring CT within MTD. No mandatory date has been announced. A voluntary pilot is running but no company is required to participate.
For limited company directors: if VAT-registered, MTD for VAT applies now. For corporation tax the obligation is coming but the date is unset. Choosing software that already supports MTD for VAT puts you ahead.
HMRC Making Tax Digital changes: how to prepare
1. Check whether and when MTD applies to you. Use HMRC’s eligibility checker. If VAT-registered, MTD for VAT applies immediately.
2. Choose MTD-compatible software. HMRC requires compatible software in place before sign-up. See our MTD software guide.
3. Start keeping digital records. The transition takes time. Getting records into a compliant format a year before your deadline is far less disruptive than scrambling at the last minute.
4. Sign up with HMRC. Sign-up authorises your software to connect to HMRC on your behalf. You must have your software set up and your most recent Self Assessment return submitted first.
5. Submit your first quarterly update. Your software will prompt you when each is due. The key is having reliable digital records in place — the submission itself is automatic.
Is there help available for MTD compliance?
Yes. Many businesses work with an accountant during the transition. A specialist can help you choose software, complete sign-up, ensure your digital links meet HMRC’s requirements, and manage your quarterly submissions and final declaration.
For businesses approaching 6 April 2026 who are not yet set up, the biggest adjustment is not the software — it is the shift to recording income and expenses on a rolling quarterly basis rather than annually.