HMRC’s Making Tax Digital (MTD) plans will ultimately create challenges for businesses, individuals and landlords alike, and our specialist tax and accounting experts are ready to assist.
MTD is changing the way in which all individuals and businesses report their financial details to HMRC.
HMRC is aiming to become one of the most digitally advanced tax administrations in the world and MTD is fundamental to realising that ambition.
The introduction of MTD is to transform tax administration to be more efficient, effective, and easier for taxpayers to get their tax right. Ultimately HMRC want to streamline filings and remove the manual re-keying of data to mitigate the risk of errors.
The first phase of the MTD journey was introduced in April 2019 with MTD for VAT. This required VAT registered businesses with a taxable turnover above the VAT threshold (£85,000) to keep digital records and use software to submit their VAT returns.
April 2021 saw the end of the soft-landing period for VAT registered businesses that are already required to comply with MTD for VAT. This phase dictated that there must be digital links between all aspects of the accounting function. This means no manual keying in of data unless it is the first point of entry to the accounting system. There needs to be a clear digital link of the data from the source document all the way through to VAT submission. Read more here.
Further phases are now being introduced
Making tax digital roadmap
1st April 2022 – Phase 3 of MTD for VAT
All VAT registered businesses will need to follow MTD rules for VAT return periods starting on or after 1st April 2022.
6th April 2024 – Phase 1 of MTD for Income Tax Self-Assessment (ITSA)
Self-employed businesses and landlords with annual business or property income above £10,000 will need to follow the rules for MTD for ITSA from their next accounting period starting on or after 6 April 2024.
All individuals can now access their Personal Tax Account (PTA) online. The account gives individuals an up to date picture of their tax position in much the same way as online banking does for personal finances.
6th April 2025 – Phase 2 of MTD for ITSA
General partnerships will fall into MTD for ITSA from April 2025, with a date for other types of partnerships such as LLPs not yet confirmed.
2026
It is expected that MTD for Corporation Tax will be introduced in 2026.
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Related resources
Making Tax Digital for business – phase 1
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HMRC Making Tax Digital VAT - key facts
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