Get started with 75% off for 3 months on Sage Accounting
search icon
CcaaS chat

Your guide to bossing Making Tax Digital

Get the answers you need to make sense of Making Tax Digital. Save time with easy-to-use online accounting software that’s HMRC-recognised.

Are you an accountant or bookkeeper?

Making Tax Digital explained

What is Making Tax Digital?

MTD is HMRC’s plan to digitise the tax system for VAT, Income Tax Self Assessment and Corporation Tax for both businesses and individuals. Its purpose is to make tax returns simpler and more efficient for everyone. 

Watch the video to learn more.

youtube video player
youtube video player

How will Making Tax Digital impact me?

If you’re using spreadsheets, you’ll either need to use bridging software or start using HMRC-recognised software instead.

Not sure if you’re affected?  Find out here

What do I need to do now?

Check if your current system is going to make you compliant for Making Tax Digital. Use our MTD tool to check if you’re affected and see what your next steps should be.

youtube video player

Your deadlines for Making Tax Digital

April 2022
Black icon of calendar

MTD for VAT

VAT-registered businesses must use recognised software to keep digital records and submit VAT to HMRC.
April 2024
Black icon of calendar

MTD for Income Tax Self Assessment

MTD for Income Tax Self Assessment will apply for all self-employed business owners and landlords with annual income over £10,000.
April 2025
Black icon of calendar

MTD for Income Tax Self Assessment

MTD for Income Tax Self Assessment will apply for general partnerships with an annual turnover of over £10,000.
April 2026
Black icon of calendar

MTD for Corporation Tax

Making Tax Digital for Corporation Tax to be introduced at the earliest.

Making Tax Digital news and advice

Get articles, insights, and tips to help with your preparations for Making Tax Digital from Sage Advice, our business blog.

How to find your USP – and why Making Tax Digital can improve how you run your business

How to find your USP – and why Making Tax Digital can improve how you run your business

The founder of SAS (Senior Accounting Services) shares her entrepreneurial lightbulb moment and sheds some light on Making Tax Digital.

Read more Read more
MTD mythbuster: 9 myths about Making Tax Digital dispelled

MTD mythbuster: 9 myths about Making Tax Digital dispelled

Myths have arisen about Making Tax Digital. In this article, we dispel some mistaken beliefs around MTD for VAT and MTD for Income Tax.

Read more Read more
MTD for VAT FAQs: 19 key Making Tax Digital questions answered

MTD for VAT FAQs: 19 key Making Tax Digital questions answered

Looking for answers to questions you have on MTD for VAT? Don't despair, this comprehensive article covers everything you need to know.

Read more Read more
Making Tax Digital checklist: How to ensure you're ready for MTD for VAT in April 2022

Making Tax Digital checklist: How to ensure you're ready for MTD for VAT in April 2022

Prepare now ahead of your first Making Tax Digital for VAT return submission in April 2022 with this Making Tax Digital checklist.

Read more Read more
Making Tax Digital: What HMRC's new penalty regime means for MTD for VAT and Income Tax

Making Tax Digital: What HMRC's new penalty regime means for MTD for VAT and Income Tax

MTD brings a new penalty regime from HMRC. How does it work? And how do people get fined? Read our extensive guide to learn more.

Read more Read more
Making Tax Digital thresholds: VAT, Income Tax and Corporation Tax

Making Tax Digital thresholds: VAT, Income Tax and Corporation Tax

The next phase of Making Tax Digital starts in April 2022. Find out the latest on thresholds for MTD for VAT, Income Tax and Corporation Tax.

Read more Read more
MTD for Income Tax postponed: Everything you need to know

MTD for Income Tax postponed: Everything you need to know

MTD for Income Tax has been delayed until April 2024. We cover the details - and why your business should take a digital approach now.

Read more Read more
Making Tax Digital: How MTD for VAT means your business can tame tax

Making Tax Digital: How MTD for VAT means your business can tame tax

Tax can certainly be taxing. Discover how Making Tax Digital for VAT will help your business stay on top of your tax requirements.

Read more Read more

Download your Making Tax Digital guide for VAT

Learn more about Making Tax Digital (MTD) for VAT, what HMRC’s new scheme means to your business and discover the steps you need to take to submit returns. 

MTD Podcasts

Carl Reader: How to boss Making Tax Digital
The serial entrepreneur and author of Boss It dives into the fundamentals of finance and sheds a light on Making Tax Digital.
75% off for 3 months

Master MTD compliance with a Sage Accounting plan

Accounting

Start

75% off for 3 months
£12
£3.00 +VAT/mo*
You save £27.00
  • Create and send invoices
  • Track what you're owed
  • Automatic bank reconciliation
  • Calculate and submit VAT
  • Be Making Tax Digital Ready for VAT
  • Supports one user
Most popular
Accounting

Standard

75% off for 3 months
£24
£6.00 +VAT/mo
You save £54.00
  • Create and send invoices
  • Track what you're owed
  • Automatic bank reconciliation
  • Calculate and submit VAT
  • Be Making Tax Digital Ready for VAT
  • Supports unlimited users
  • Manage and submit CIS
  • Run advanced reports
  • Send quotes and estimates
  • Forecast cash flow
  • Manage purchase invoices
  • Snap receipts with AutoEntry, 2 months free(2)
    Accounting

    Plus

    75% off for 3 months
    £30
    £7.50 +VAT/mo
    You save £67.50
    • Create and send invoices
    • Track what you're owed
    • Automatic bank reconciliation
    • Calculate and submit VAT
    • Be Making Tax Digital Ready for VAT
    • Supports unlimited users
    • Manage and submit CIS
    • Run advanced reports
    • Send quotes and estimates
    • Forecast cash flow
    • Manage purchase invoices
    • Snap receipts with AutoEntry, 2 months free(2)
    • Multi-currency banking and invoicing
    • Manage inventory

    *Get 75% off for 3 months, then £12/£24/£30 + VAT/mo (tier depending). Terms and conditions apply.
    (1) Starting at 5 employees from £1.75 (offer price) per month + VAT with the option to add employee tiers for up to 100 employees. RRP from £7 + VAT per month (after offer).
    (2) Snap and upload data from unlimited receipts, invoices and supplier statements with AutoEntry, free for your first 2 months. Subject to fair usage policy. Standard and Plus tiers only.
    **Start your free trial and receive 1 month free, then £12/£24/£30 + VAT/mo (tier depending, and subject to any applicable promotion).

    Making Tax Digital FAQs

    For more MTD knowledge and advice, check the FAQs below or visit our Sage Advice section on everything MTD for VAT.

    Right now, only UK VAT-registered businesses are affected by MTD. However, there’s a goal for all UK businesses to comply in future. 

    April 2022: MTD will apply to VAT registered businesses with taxable turnover below £85,000. 

    April 2024: Self-employed business owners and landlords with property income over £10,000 will need to follow MTD for Income Tax Self Assessment rules from their next accounting period. 

    April 2026: MTD for Corporation Tax is expected to begin.  

    Making Tax Digital was put in place to reduce tax admin for taxpayers, make it easier to submit returns, and reduce the likelihood of errors.  By complying with MTD legislation and adopting compliant software you’ll be able to easily view tax information in one place, and you’ll get total peace of mind that you’re compliant when all VAT registered businesses will need to complete their VAT returns under MTD in April 2022. 

    With MTD-compliant software you can: 

    • Reduce the amount of paperwork you have 
    • Ensure VAT returns are accurate 
    • Easily manage bookkeeping from one place 
    • View real-time tax information when you need it 
    • Keep track of funds to stay on top of business 
    • Get more time back to focus on your business 

    From April 2022, all VAT registered businesses with taxable turnover need to start using Making Tax Digital software so that they can submit tax returns digitally.  

    It’s fast and easy to connect Sage Accounting to HMRC.  When you go to complete your VAT return in Sage Accounting you’ll have the option to authenticate with HMRC in 3 simple steps:

    • Select Reconnect and Authenticate to go to the HMRC website
    • Select Continue and enter your Government gateway User ID and Password
    • Select Grant Authority and you’ll return to Sage Accounting connected to HMRC

    The first phase of MTD started in April 2019, mandating that most VAT registered businesses with taxable turnover over £85,000 keep digital tax records. The next phases of MTD include: 

    April 2022: MTD for VAT will be extended to all VAT registered businesses, including those below the VAT threshold. 

    April 2024: MTD for Income Tax Self Assessment mandates unincorporated (sole traders and partnerships) businesses and landlords with income above £10,000.

    April 2026: The earliest possible date for MTD for Corporation Tax after the government announced it wouldn’t be mandated before then.

    If your taxable turnover has not gone above £85,000, you will need to comply with Making Tax Digital in April 2022. From then, the only way to opt out of Making Tax Digital is either on religious grounds (where a business is run by practising members of a religious society or order whose beliefs are incompatible with using electronic communications), if it is not reasonably practicable for you to use digital tools to submit your returns due to location (if you can’t get internet access at your home and you can’t get to another location), or if you have a disability (if you can’t use a computer, tablet, or smartphone for the amount of time it takes to keep digital records). If you believe your business is exempt, you must contact HMRC to confirm.
    Keeping your records digitally for Making Tax Digital (MTD) purposes means that you must store a digital copy of the transactions which make up the figures on your VAT return. This needs to be kept in functional compatible software. Functional compatible software is software or a set of software programs which must: record and preserve digital records, send the data to HMRC through the API, and receive information from HMRC via the API. 
    Sage is compliant with MTD legislation. In fact, we’ve worked with HMRC on MTD for years to ensure our accounting products make it as easy as possible for you to stay compliant.
    If you’re registered for VAT and your taxable turnover is above £85,000, Making Tax Digital was compulsory from April 2019. From April 2022, this will be compulsory for all businesses who are registered for VAT. This means you need to keep digital records and send VAT returns to HMRC digitally using MTD-compliant software.