Making tax digital

Making Tax Digital (MTD) is a government initiative to make it easier for people and businesses to get tax right by keeping and submitting digital records. It aims to make the tax system (and how it’s administered) more effective, more efficient and easier to understand. 

VAT

The first stage of MTD was introduced in 2019. Since 1 April 2022, all VAT-registered businesses have been required to keep digital records and use MTD-compatible software to submit VAT returns electronically.

Income tax

Self-employed business owners and landlords with annual business or property income above £50,000 will need to follow new MTD for Income Tax rules from 6 April 2026.

Those with qualifying income of more than £30,000 will have to follow the rules from April 2027. Individuals with qualifying income of more than £20,000 will be included from April 2028. Partnerships are expected to be required to join at a date yet to be announced.

Corporation tax

HMRC does not intend to introduce MTD for Corporation Tax (CT). They have announced plans to modernise services for Corporation Tax beginning with a renewal of internal systems for CT to provide the foundation for future improvements. HMRC says they will work with stakeholders to identify changes that will provide the best outcomes for taxpayers and government. 

Tax in real time

HMRC will aim to deal with anything affecting tax as close to real time as possible, to help prevent errors and stop tax due or any repayments you owe building up.

A single tax account

You’ll see a comprehensive picture of your income and any tax due in your HMRC tax account. It’ll be like online banking but with a personalised picture of your tax liabilities.

Digital contact with customers

Business owners will get prompts, advice and support through webchat and secure messaging.