Stay compliant with Making Tax Digital with expert support tailored to your business. We help you manage VAT and prepare for Income Tax changes using the right software and processes.
MTD for businesses
Making Tax Digital (MTD) for VAT came into effect on 1 April 2019 for VAT-registered businesses above the VAT threshold and was extended to all VAT-registered businesses from 1 April 2022, regardless of turnover.
Under the current rules, all VAT-registered businesses must keep digital records and submit their VAT returns to HMRC using compatible software. This means businesses can no longer file VAT returns through the HMRC online portal and must instead use MTD-compliant software or bridging tools.
These requirements are designed to improve accuracy, reduce errors, and encourage businesses to adopt more efficient digital accounting processes.
MTD for individuals
HMRC has now introduced Making Tax Digital for Income Tax Self Assessment (MTD for ITSA) for self-employed individuals and landlords, with a phased rollout applying to more taxpayers over time.
From April 2026, MTD for ITSA is mandatory for sole traders and landlords with annual business or property income over £50,000. This will extend to those earning over £30,000 from April 2027, with further expansion expected in later years.
MTD Exemptions
HMRC has stated in VAT Notice 700/22 that there are exemptions for some organisations subject to insolvency procedures, based on religious beliefs, and those who, because of reasons of age, disability, remoteness of location or “any other reason” that means it’s not “reasonably practicable” for the business owner to use digital tools to keep business records or submit returns.
Preparing for MTD
The MTD rules mean that filing directly via the HMRC gateway is no longer an option for those within the scope of MTD for VAT, and software must be used instead.
Choosing software for MTD compliance will depend on an organisation’s existing level of technology adoption and business needs. Organisations that make use of very little technology can continue to use spreadsheets, provided that VAT returns are filed through bridging software capable of extracting the contents of a spreadsheet and submitting it to HMRC.
Organisations should not only consider how to remain compliant with the minimum statutory requirements but also how the fast rate of technological change can help them stay competitive in the future. As a result, many organisations are investing in more comprehensive cloud-based software, accessible via the internet, such as FreeAgent or Xero.
The Making Tax Digital reform strongly indicates that the world is becoming ever more integrated with technology, and HMRC is implementing new rules to encourage businesses to move towards digital record-keeping.
How our team can help
Our team at Chart Accountancy have been utilising cloud technology for many years, which, in addition to our expert accounting services, means that we are ideally placed to help our clients and prepare for MTD. To discuss how the MTD rules affect you and your business, please contact us.
Speak to us
If you would like to know more about Making Tax Digital, do not hesitate to get in touch with our team. We have years of experience in accounting for contractors, freelancers and small businesses so whatever your query – we are here to help.
To speak to a member of our team call us on 0333 772 7753 or email our team at [email protected] and we will be in touch as soon as possible.
