Making Tax Digital Accountants

Making Tax Digital (MTD) – An Overview

Since the government announced its plans for MTD in 2015, HMRC has begun to make changes in the way millions of businesses record and pay their taxes.

Whilst MTD for VAT started in 2019, it was not compulsory until April 2022 for all businesses to be registered to operate their VAT submissions under the MTD regime.

In addition, MTD for income tax will affect the self-employed and property owners with more than £50,000 of income from April 2026 and £30,000 of income from April 2027. It was announced in the 2025 Spring Statement that the income threshold is to be lowered to £20,000 from April 2028. In the future MTD will eventually be rolled out to Partnerships and Limited Companies.

So what does this all mean for your business?

Keep reading for a comprehensive look at MTD, specific deadlines for registering and how to comply with the regulations (including software for MTD).

What is Making Tax Digital?

Making Tax Digital, also referred to as MTD, is a change in the way individuals and businesses are expected to report and pay tax. It is designed to make it easier for you to keep on top of your affairs and for HMRC to receive information more regularly.

HMRC’s plan is to be one of the most digitally advanced countries when it comes to tax administration. MTD is a fundamental change in the way the tax system works to make it more effective, more efficient, and easier to get your tax right.

The changes are not being all rolled out at once but in the long run, like VAT-registered businesses who are already required to file under the MTD scheme, self-employed and landlord tax payers will be required to follow in their steps. In time partnerships and companies will also join the scheme.

MTD for VAT-registered businesses is already in effect and you are expected to be registered for the service unless you have a valid exemption.

Please see our dedicated pages for more information on Making Tax Digital for Income Tax for Self-Employed and Making Tax Digital for Income Tax for Landlords.

What Do the Changes Mean?

To comply with MTD, businesses must keep digital financial records. This must be done in what HMRC refers to as ‘compatible software’. Put simply, you will be required to connect the software directly to HMRC in order to file your tax returns.

The connection is known as a ‘digital link’. HMRC defines a digital link as having two key characteristics:

• Data is electronically transferred between software programs or applications. This link can include a linked spreadsheet cell with automated formulas.

• Automated transfer that does not require any manual actions like copying and pasting data or other ways of manually moving data between multiple pieces of software.

In effect, HMRC wants all your data to be input into a single piece of software and automatically sent to them with a single click of a button.

How Do You Register for Making Tax Digital?

MTD (Income Tax) is now available for testing on the Public BETA before it becomes mandatory in April 2026. If you would like to sign up early please follow this link to the HMRC website. You do however, have the option to sign up to MTD now, but defer submitting quarterly updates until April 2026.

If you do not already have a Government Gateway account for your business you will need to create one.

Along with this registration, you will need to find software that’s compatible with MTD. Keep reading for more information.

Registering for MTD (VAT) is no longer required as any new VAT registrations will automatically be signed up for MTD.

Making Tax Digital Exemptions

In rare cases, there are exemptions to MTD which include:

• It’s not reasonable for you to use digital tools due to age, disability, or lack of internet due to remote locations. This is often referred to as digital exclusion.

• Business is run by practising members of a religion whose beliefs are incompatible with using electronic communication.

• Personal representative of someone who has died.

If you feel you require an exemption you must apply directly to HMRC with your reason.

In addition, Trusts, Estates, Trustees of Registered Pension Schemes, and Non-Resident Companies are exempt from MTD.