What is Making Tax Digital?
MTD is HMRC’s long-term plan to move UK tax record-keeping and submissions onto digital systems that connect directly to HMRC, for more accurate and timely tax reporting.
HMRC is going digital-first
Digital record-keeping is being rolled out across the major tax streams.
Fewer errors
Digital records reduce manual entry errors, a common cause of incorrect returns and enquiries.
A real-time view
Up-to-date records give you a current view of your tax position.
Plan early
Early planning avoids disruption, penalty risk and last-minute software changes.
How we support your transition
Digital record-keeping
We assess your current methods and recommend suitable MTD-compatible software.
Cloud accounting integration
Setup for platforms such as Xero, QuickBooks and Sage.
API and bridging software
Connecting spreadsheets or legacy systems to HMRC digitally.
MTD transition strategy
A phased rollout plan that limits disruption.
Staff training and onboarding
Team training and client communication materials.
Ongoing compliance monitoring
Support after go-live as rules and thresholds evolve.
Step-by-step guide to becoming MTD compliant
Assess your records
Review current record-keeping and identify gaps.
Choose compatible software
Full cloud accounting or bridging software.
Migrate and test data
Before relying on it for live filings.
Train your team
Staff, and clients where relevant, learn the new process.
Go live
Submit digitally, with a named contact for troubleshooting.
Monitor and review
Review your setup as your business or the rules change.
MTD readiness checklist
- You know which MTD rules apply to you, and from when
- Records are kept digitally, not on paper or in disconnected spreadsheets
- Your software is HMRC-recognised and MTD-compatible
- You have a plan for migrating historical data accurately
- Staff have received basic training
- You have a process for reviewing submissions
- It’s clear who to contact if a submission fails
HMRC’s MTD regulations
MTD is a legal requirement for those in scope, introduced in phases with separate thresholds and timetables:
- VAT: VAT-registered businesses have been in scope since 2022, regardless of turnover.
- Income Tax Self Assessment: being phased in for sole traders and landlords above set income thresholds, starting April 2026.
FAQs
Frequently asked questions
What is Making Tax Digital?
HMRC’s initiative requiring digital record-keeping and submission of tax information using compatible software, rather than manual filing.
Is Making Tax Digital a legal requirement?
Yes, for those within its scope. Start dates and requirements vary by tax stream and income, so confirm your position with HMRC or a qualified adviser.
Who needs to comply with MTD for Income Tax?
Sole traders and landlords are being phased in based on qualifying income, with the threshold reducing over time. We can help check your circumstances.
How do I know if I’m ready?
Use the readiness checklist above. If anything is missing, we recommend an assessment well before your deadline.
How long does a transition take?
Straightforward transitions can often be completed within a few weeks. Larger client banks usually take longer with a phased rollout.