What is Making Tax Digital?
Making Tax Digital (MTD) is HMRC's programme to modernise the UK tax system by requiring businesses and individuals to keep digital records and submit returns using compatible software. It began with MTD for VAT, which now applies to all VAT-registered businesses regardless of turnover, and is expanding to other taxes, including Income Tax Self Assessment for many self-employed people and landlords.
What does Making Tax Digital mean for businesses?
Under MTD, businesses must maintain digital records of their transactions and file returns directly from compatible software, rather than manually keying figures into HMRC's online portal. This is intended to reduce errors and give both businesses and HMRC more accurate, up-to-date financial information. As MTD extends beyond VAT, more businesses and individuals will need to review their record-keeping and software to stay compliant.
Related terms: VAT, VAT Return, VAT Registration, VAT Cash Accounting Scheme
Tax rules depend on the nature of your business and individual circumstances. This glossary provides general information and is not personalised tax advice.