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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? Explore MTD for accountants and bookkeepers

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.

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.

Your deadlines for Making Tax Digital

April 2022
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MTD for VAT

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

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

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

The latest phase of Making Tax Digital started in April 2022. Get the lowdown on thresholds for MTD for VAT, Income Tax and Corporation Tax.

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Making Tax Digital: Answers to FAQs on MTD for VAT, Income Tax and Corporation Tax

Making Tax Digital: Answers to FAQs on MTD for VAT, Income Tax and Corporation Tax

With Making Tax Digital in full swing, discover the answers to questions that will help accountants support their clients.

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Basis period reform and Making Tax Digital: What businesses need to know

Basis period reform and Making Tax Digital: What businesses need to know

What's the basis period reform? Learn what sole traders and businesses need to know, covering accounting periods, overlap profits and more.

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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.

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Making Tax Digital for VAT groups: Submissions and deadlines

Making Tax Digital for VAT groups: Submissions and deadlines

Understand how Making Tax Digital affects VAT groups, including submission requirements and deadlines that have passed.

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Making Tax Digital for VAT: 6 simple tips to get your business ready

Making Tax Digital for VAT: 6 simple tips to get your business ready

Does MTD for VAT affect your business? If so, here's what you need to know about digital record keeping and the tax return rules.

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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.

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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 helps you stay on top of your business tax requirements.

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MTD Webinar

Still struggling with Making Tax Digital? Learn how you are impacted by MTD for VAT in our free 15-minute webinar. You’ll find out more about: 

  • Why MTD is happening and what it means for your business 
  • How to comply with changes and important compliance dates 
  • How to best keep digital records and submit returns 
Register now

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.
Go to podcast

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. 
Download my guide

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    • 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
    Compatible with:

    *Get 4 months free, then £12/£26/£33 + VAT/mo (tier depending). Terms and conditions apply.
    (1) Starting at 5 employees from £0.00 (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.

    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.

    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

    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.

    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 

    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. 

    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.

    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.  

    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.

    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.

    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.
    These articles and related content is the property of The Sage Group plc or its contractors or its licensors (“Sage”). Please do not copy, reproduce, modify, distribute or disburse without express consent from Sage. These articles and related content is provided as a general guidance for informational purposes only.
     
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