Making Tax Digital

Making Tax Digital (MTD) is a government initiative which will affect how businesses, individuals, and other organisations file their VAT and personal tax returns.

Records will need to be kept in digital format and filed online via software.

MTD for VAT is now mandatory for all VAT submissions.

The next stage of Making Tax Digital is expected to be MTD for income tax (MTD for ITSA) which is due to be phased in from April 2026, having been delayed by two years. The phases expected are as follows:

• April 2026 – Mandatory filing for businesses, self-employed individuals, and landlords with over £50,000 income
• April 2027 – Mandatory filing for businesses, self-employed individuals, and landlords with over £30,000 income
• The government will review the needs of smaller businesses, particularly those with income under £30,000 before any further mandation
• MTD will not be extended to general partnerships in 2025 as previously announced, but will be introduced at a later date.
• New penalty system will come into effect for taxpayers when they become mandated to join MTD.

What does this mean for me?

In order to make sure you are ready for MTD for ITSA, if your income exceeds the thresholds, you will need to ensure that you adopt fully compliant software and are keeping digital records before signing up.

The current list of MTD-compatible software is listed here:-

https://www.gov.uk/guidance/find-software-thats-compatible-with-making-tax-digital-for-income-tax

Alternatively, please speak to us and we can advise on which software we would recommend.

If you have any further questions about MTD for ITSA please speak to your usual contact at Richardsons, or get in touch with Chloe Jackson.