Making Tax Digital (MTD) is HMRC’s programme to modernise the tax system by moving from paper‑based processes to simple, digital record‑keeping. Most businesses will need to use approved software to keep financial records and send updates directly to HMRC.

 

Here is a summary of what’s changed, when it affects your business and where to find the official guidance.

What MTD Means for Your Business

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Under MTD, eligible businesses must:

• Keep digital records of income and expenses

• Use HMRC‑approved MTD‑compatible software

• Submit quarterly updates to HMRC instead of one annual return

 

This aims to reduce errors and give businesses clearer, more up‑to‑date financial information.

 

When You Need to Join MTD

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MTD already applies to all VAT‑registered businesses.

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For Income Tax Self Assessment (ITSA), the rollout is based on your annual business or property income:

• From April 2026 – income over £50,000

• From April 2027 – income over £30,000

• From April 2028 – income over £20,000

 

If you fall into one of these groups, you’ll need to start using MTD‑compatible software and submit quarterly updates.

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Check if Your Business Is Exempt

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Some businesses may be exempt due to age, disability, location, or religious grounds.
 

Find MTD‑Compatible Software

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HMRC provides up‑to‑date lists of approved software:

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• MTD for Income Tax software
   

• MTD for VAT software
   

Most major accounting platforms (e.g., Xero, QuickBooks, Sage) are already compliant.

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Sign Up for MTD

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Businesses are not automatically enrolled. HMRC will contact you when you need to join, but you must complete the sign‑up process yourself. You can sign up here. If you use an accountant or agent, they can register on your behalf.

 

MTD for VAT (Already Mandatory)

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All VAT‑registered businesses must:

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• Keep VAT records digitally

• Submit VAT returns using MTD‑compatible software

 

You must record VAT charged, VAT paid, transaction dates, adjustments, and any VAT‑exempt items.

 

What Northfield Businesses Should Do Now

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1. Check your income level to confirm when MTD applies to you.

2. Review your bookkeeping system – paper or spreadsheets will no longer be enough.

3. Choose HMRC‑approved software that suits your business needs.

4. Speak to your accountant if you have one.

5. Sign up in good time to avoid disruption.

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