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MTD for business overview

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

Page last updated

28 August 2018

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 April 2020 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) will be required to maintain digital accounting records. Maintaining paper records will cease to meet the legal requirements in tax legislation
  • Businesses and organisations will be required to use a functional compatible software product to submit their returns to HMRC. The software will use HMRC’s API (Application Program Interfaces) platform to submit information to HMRC. The current HMRC online tax return services will be withdrawn for those within the scope of the MTD rules.

Timeline for MTD

  1. From April 2019: Impacts VAT reporting by all 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.
  2. From April 2020, at the earliest: Impacts MTD for income tax and corporation tax. MTD for VAT may also be extended to all VAT registered businesses. Further details have yet to be announced.