Making Tax Digital is a UK government initiative to modernise the tax system by requiring certain taxpayers to keep digital records and submit tax data electronically. A common abbreviation for Making Tax Digital is MTD.

You have to use authorised software to record income and expenses digitally, then send regular updates (usually quarterly) to HM Revenue & Customs (HMRC), instead of doing a single paper or online return once a year. You still need to submit an end-of-year, final declaration under MTD.

MTD for VAT applies to all VAT‑registered businesses, while MTD for Income Tax (ITSA) will apply in phases: from April 2026 for those earning over £50,000; from April 2027 for those above £30,000; and from April 2028 for those earning over £20,000.

You need to keep digital records of all income and expenses related to your self-employment or property business (invoices, rent received, repairs and maintenance, allowable expenses).

A digital record is any record stored in electronic format using MTD-compatible software (or bridging software) that HMRC can access — rather than paper receipts or ledgers.

No. Under MTD, you must submit your returns via HMRC‑approved accounting or bridging software rather than using the HMRC portal.

Yes. Each sole-trade business or property business must keep its own set of digital records and submit its own quarterly updates under MTD.

If you’re a landlord subject to MTD, you’ll use software to track rental income and allowable expenses, submit quarterly summaries to HMRC, and then complete a final declaration at year end instead of a traditional annual Self Assessment return. There are dedicated software for Making Tax Digital for landlords.

You need MTD-compatible software such as accounting platforms like Xero, QuickBooks, or Sage, or bridging software if you prefer spreadsheets.

Yes, you can still use spreadsheets, but only if they are connected to HMRC via bridging software to ensure compliance.

MTD for VAT is already mandatory. For ITSA, the roll‑out schedule is: April 2026 (£50k+), April 2027 (£30k+), and April 2028 (£20k+).

Quarterly update deadlines typically fall end-of-quarter plus about one month (e.g. 7 August, 7 November, 7 February, 7 May), with a final declaration and payment by 31 January after tax-year end.

Failing to comply with MTD requirements may result in HMRC applying penalties under its new points-based system. Each missed deadline adds a penalty point. Once a threshold is reached, a financial penalty will be charged, and HMRC may also apply interest on any late payments.

Yes. If your qualifying income is below the threshold; or if you are “digitally excluded” (e.g. lack of digital access, disability, remote location, etc.), you can apply for an exemption.

Yes. VAT returns remain quarterly, while ITSA introduces quarterly updates with a final annual declaration instead of the traditional Self-Assessment.

You must register via the HMRC website and authorise your chosen MTD-compatible software to connect and submit on your behalf.

MTD helps reduce errors, streamlines record-keeping, strengthens real-time visibility of tax liabilities, and makes the tax process more efficient overall.

Yes. MTD began with VAT-registered businesses and is expanding to income tax for self-employed and landlords. The digitalisation model may be extended further over time. However, there's no deadline yet for partnerships or Corporation Tax.

Yes. Accountants and tax agents can manage your MTD digital records and submit quarterly updates and the final declaration for you, as long as they’re authorised through HMRC.