Making Tax Digital (MTD) is HMRC's plan to move tax online. It requires you to keep digital records and report to HMRC through compatible software, instead of on paper or in a single annual return. Here is what that means for you, in plain English.
Making Tax Digital is rolling out one tax at a time. Here is where each part stands today.
Live now. All VAT-registered businesses keep digital VAT records and file returns through compatible software.
VAT guide →Live now for income over £50,000. Sole traders and landlords over the threshold send quarterly updates and a final declaration.
Income Tax guide →Corporation Tax is not currently mandated and partnerships are a later phase with no set date. Nothing to do here yet.
Limited companies →MTD for VAT begins for businesses above the VAT threshold.
All VAT-registered businesses must follow MTD for VAT.
MTD for Income Tax begins for income over £50,000.
Income Tax threshold drops to £30,000.
Income Tax threshold drops to £20,000.
See the full breakdown, including quarterly update dates, on the deadlines & timeline page.
The quickest way to find out is to check your income against the thresholds. Our short guide walks you through it with worked examples.
Check if MTD applies to you →Keep digital records, file quarterly updates and submit your final declaration, all in one place. Free for sole traders, with no filing paywall.
Clear Books is HMRC-recognised and free for sole traders. When you are ready to move off spreadsheets, we make it a 15-minute job.
