Glossary

Making Tax Digital

Krishna Prasad Dahal, Chartered Accountant

Reviewed by Krishna Prasad Dahal FCCA, ACA (ICAEW), FCA (ICAI India)ICAEW Council Member · Last reviewed

Definition

Making Tax Digital (MTD) is HMRC’s programme requiring businesses to keep digital records and send tax information to HMRC through compatible software. It applies to all VAT-registered businesses and, from 6 April 2026, to sole traders and landlords whose qualifying income is over £50,000. HMRC has said it will not introduce MTD for Corporation Tax.

Which taxes MTD covers

Tax Who is in MTD What they send
VAT All VAT-registered businesses Each VAT return
Income Tax Sole traders and landlords over the threshold Quarterly updates and an annual return
Corporation Tax Not planned CT600 filed as usual

The Income Tax threshold falls to £30,000 from 6 April 2027 and £20,000 from 6 April 2028, as explained under MTD for Income Tax.

What MTD asks of you

Digital records are kept in MTD-compatible software, or in spreadsheets linked to it by bridging software. HMRC receives totals, not individual receipts or invoices. People who are digitally excluded can apply to HMRC for an exemption.

For the detail on the new rules, see what MTD for Income Tax means for you. Sole traders and landlords now in scope can use SmartFiling’s MTD for Income Tax service.

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