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MTD for business overview

HMRC's vision to digitalise the UK tax system is well underway. The transformation started with Making Tax Digital (MTD) for VAT from April 2019.

Page last updated

23 May 2019

After MTD for VAT has been implemented, MTD for income tax (for the self-employed and those with income from property) and MTD for corporation tax are expected to follow, but not before 2021 at the earliest. HMRC is also running an MTD for individuals transformation project.

The essential elements of MTD are:

  • Businesses and organisations (which includes those with income from property) are required to maintain digital accounting records. Maintaining paper records ceases to meet the legal requirements in tax legislation
  • Businesses and organisations are required to use a functional compatible software product to submit their returns to HMRC. The software uses HMRC’s API (Application Program Interfaces) platform to submit information to HMRC. The current HMRC online tax return services are withdrawn for those within the scope of the MTD rules.

Timeline for MTD

  1. From April 2019: Mandatory for VAT reporting by VAT registered businesses and organisations (including sole traders, partnerships, limited companies, non-UK businesses registered for UK VAT, trusts and charities) with turnover above the VAT threshold. HMRC has announced a 6 month deferral to the start date for some more complex businesses.

  2. - Read more on MTD for VAT

  3. From 2021, at the earliest: Mandatory for income tax and corporation tax reporting by some businesses and landlords. MTD for VAT may also be extended to all VAT registered businesses. Further details have yet to be announced.

  4. - Read more on MTD for income tax