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Making Tax Digital – An Overview Of Where We Are

Making Tax Digital (MTD) requires those businesses caught by the MTD rules to record their business transactions on compliant software and to submit quarterly returns to HMRC direct from the software.

In April 2019 Making Tax Digital (MTD) for VAT commenced. This applied to those businesses which were registered for VAT and had sales in excess of the VAT registration threshold of £85,000.

In April 2022 the remaining businesses which were VAT registered were required to comply with the MTD rules.

From 1 April 2024 MTD for Income Tax commences. This requires those people who are self employed or who have rental properties to comply with the MTD rules. The self employed and those who have property rental income are exempt from MTD if their annual income from the business / properties is less than £10,000. There are approximately 2.6m self employed and 1.0 million property owners who are likely to be caught by these new rules.

In April 2025  partnerships will be caught by the MTD rules.

MTD for Corporation Tax is currently scheduled to commence in April 2026. This will bring into the MTD regime those Limited Companies which are trading and which are not VAT registered.

In addition to the quarterly reporting of information direct from the accounting software, End Of Period Statements (EOPS) are required to be submitted bysthe self-employed and property owners. The deadline for submitting the EOPS is the 31 January following the end of the tax year. In addition a Final Declaration will need to be submitted which will be similar to the self-assessment tax return.