Glossary · UK

What is Making Tax Digital (MTD)?

HMRC programme requiring businesses to keep digital records and submit tax returns using compatible software instead of paper or manual methods.

Full Definition

Making Tax Digital is HMRC's initiative to digitise the UK tax system. MTD for VAT has been mandatory for all VAT-registered businesses since April 2022. MTD for Income Tax Self Assessment (MTD ITSA) applies from April 2026 to sole traders and landlords with gross income above £30,000, expanding to those above £20,000 from April 2027. Under MTD ITSA, taxpayers must keep digital records and submit four quarterly updates plus an End of Period Statement and Final Declaration to HMRC each year using HMRC-recognised software. The aim is to reduce tax errors and bring income tax reporting closer to real time.