Prepare for Making Tax Digital
Making Tax Digital requires businesses to manage their tax affairs with HMRC using compatible software.
Done before the coffee gets cold.
What is Making Tax Digital?
Making Tax Digital (MTD) is part of the Government’s plan to modernise the UK tax system, making it easier for people to get their tax right.
MTD applies to all VAT-registered businesses
All VAT-registered businesses must comply with MTD for VAT rules, unless they are exempt.
Maintaining digital records
VAT-registered businesses are required by law to maintain their digital records.
Making Tax Digital compatible software
Businesses need to use compatible, HMRC-recognised MTD software to keep digital records and file VAT returns.
Signing up for MTD
HMRC automatically signs up VAT-registered businesses for Making Tax Digital.
Making Tax Digital timeline
Here are the key dates and MTD requirements you need to know.
April 2022
Making Tax Digital for VAT (MTD for VAT) is introduced for all VAT-registered businesses, regardless of turnover.
April 2026
Making Tax Digital for Income Tax comes into place for sole traders and landlords earning above £50,000 annually.
April 2027
Making Tax Digital for Income Tax comes into place for sole traders and landlords earning above £30,000 annually.
April 2028
Making Tax Digital for Income Tax comes into place for sole traders and landlords earning above £20,000 annually.
MTD for accountants and bookkeepers
Xero is an all-in-one platform to simplify your business tasks. Track cash flow, invoice instantly, and file digital tax returns.
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Making Tax Digital for Income Tax
Previously known as Making Tax Digital for Income Tax Self Assessment, MTD for IT replaces the annual Self Assessment tax return with a fully digital system. MTD for IT consists of four quarterly updates each year that include details of income and expenditure. Plus, a Final Declaration to confirm submissions are complete and correct. To comply with MTD for IT requirements, sole traders and landlords need HMRC-recognised software in place.
Previously known as Making Tax Digital for Income Tax Self Assessment, MTD for IT replaces the annual Self Assessment tax return with a fully digital system. MTD for IT consists of four quarterly updates each year that include details of income and expenditure. Plus, a Final Declaration to confirm submissions are complete and correct. To comply with MTD for IT requirements, sole traders and landlords need HMRC-recognised software in place.
MTD for Income Tax replaces the annual Self Assessment tax return with four quarterly updates and a Final Declaration. This means self-employed people and landlords will need to submit records of income and expenditure to HMRC more frequently. It also means these records need to be kept digitally. While this is an increase in reporting frequency, it does mean reporting income and expenditure closer to the time it was generated. Plus, sole traders and landlords can see an updated view of their tax liability with every submission, making it easier to plan for your bill.
MTD for Income Tax replaces the annual Self Assessment tax return with four quarterly updates and a Final Declaration. This means self-employed people and landlords will need to submit records of income and expenditure to HMRC more frequently. It also means these records need to be kept digitally. While this is an increase in reporting frequency, it does mean reporting income and expenditure closer to the time it was generated. Plus, sole traders and landlords can see an updated view of their tax liability with every submission, making it easier to plan for your bill.
Xero software is HMRC-recognised for MTD for Income Tax, and has all the tools you need to comply with the rules. You can keep digital records and submit compliant returns to HMRC. Plus, additional features can save you time and improve accuracy. For example, bank reconciliation predictions suggest matches for statement lines, so you can reconcile your accounts faster. Real-time tax estimates make it easier to plan for your bill. Plus, automatic updates in line with legislation help you stay on the right side of compliance.
Xero software is HMRC-recognised for MTD for Income Tax, and has all the tools you need to comply with the rules. You can keep digital records and submit compliant returns to HMRC. Plus, additional features can save you time and improve accuracy. For example, bank reconciliation predictions suggest matches for statement lines, so you can reconcile your accounts faster. Real-time tax estimates make it easier to plan for your bill. Plus, automatic updates in line with legislation help you stay on the right side of compliance.
More about Making Tax Digital for VAT
Xero’s Making Tax Digital software works for both MTD and non-MTD VAT digital services. Once you’re signed up for MTD, you can only submit MTD VAT returns. All VAT-registered businesses have been required to use MTD VAT returns since April 2022 (unless you have an exemption).
See how to set up MTD for VAT in XeroXero’s Making Tax Digital software works for both MTD and non-MTD VAT digital services. Once you’re signed up for MTD, you can only submit MTD VAT returns. All VAT-registered businesses have been required to use MTD VAT returns since April 2022 (unless you have an exemption).
See how to set up MTD for VAT in XeroIf you use spreadsheets for VAT, you can still connect to HMRC’s MTD system via Xero. Xero provides bridging software that lets you upload VAT amounts, then send MTD VAT standard rate returns from Xero.
See how to get VAT data into Xero from spreadsheetsIf you use spreadsheets for VAT, you can still connect to HMRC’s MTD system via Xero. Xero provides bridging software that lets you upload VAT amounts, then send MTD VAT standard rate returns from Xero.
See how to get VAT data into Xero from spreadsheetsMTD for IT comes into effect from April 2026 for businesses, self-employed individuals, and landlords with income over £50,000. For those with income over £30,000, it comes into effect from April 2027, and for those earning over £20,000 from April 2028.
Learn more about MTD for Income TaxMTD for IT comes into effect from April 2026 for businesses, self-employed individuals, and landlords with income over £50,000. For those with income over £30,000, it comes into effect from April 2027, and for those earning over £20,000 from April 2028.
Learn more about MTD for Income TaxSince April 2022, all VAT-registered businesses have been required to follow Making Tax Digital (MTD) rules. Here's all the key information you need to know, including answers to common questions about MTD for VAT.
Learn more about MTD for VATSince April 2022, all VAT-registered businesses have been required to follow Making Tax Digital (MTD) rules. Here's all the key information you need to know, including answers to common questions about MTD for VAT.
Learn more about MTD for VATAll VAT registered businesses are required to follow MTD rules. That includes sole traders, limited companies, partnerships, charitable trusts, and landlords with at least one UK property. Here's everything you need to know about MTD for VAT as a business owner.
Learn more about MTD for businessesAll VAT registered businesses are required to follow MTD rules. That includes sole traders, limited companies, partnerships, charitable trusts, and landlords with at least one UK property. Here's everything you need to know about MTD for VAT as a business owner.
Learn more about MTD for businessesWe answer common questions about how accountants can prepare their clients and practice for MTD, including setting up your accounting practice for MTD and how to support clients who want to continue using spreadsheets.
Learn more about MTD for accountantsWe answer common questions about how accountants can prepare their clients and practice for MTD, including setting up your accounting practice for MTD and how to support clients who want to continue using spreadsheets.
Learn more about MTD for accountants
Making Tax Digital VAT software
Get started in a few steps. Any Xero plan that supports VAT is compatible with Making Tax Digital.
Check you're signed up for MTD for VAT
If you’re VAT registered, you’ll automatically be signed up for MTD for VAT.
Connect Xero to HMRC
HMRC will email to confirm you’re signed up to MTD for VAT. You can then connect HMRC digital tax with Xero.
Use the correct VAT filing
Use the MTD VAT return, and submit it to HMRC directly from Xero.
Use Xero for MTD
Access all Xero features free for 30 days, then decide which plan best suits your business.
Explore more MTD news and resources
Making Tax Digital for VAT
All VAT supporting Xero plans cover MTD at no extra cost. Find out more about how Xero and MTD works.
Making Tax Digital software
Learn more about why you need Making Tax Digital software that’s 100% HMRC compliant.
Making Tax Digital resources
Explore our MTD webinars, guides, articles, and FAQs for everything you need to know about MTD for VAT.
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