Making Tax Digital Hub

The MTD rules apply to all UK VAT-registered businesses. This means that all VAT returns will need to be submitted to HMRC using MTD-compatible software each quarter for the periods commencing on or after 1 April 2022.

If more than one software package or spreadsheet is used, they must be digitally linked.

What are my options for digital record keeping?

Cloud accounting software

Using cloud accounting software will ensure that you are MTD compliant. Instead of saving your accounting information on your desktop computer, cloud accounting software stores your information on remote servers in ‘the cloud’.

Cloud software is incredibly flexible – it gives you access to real-time information about your business finances anytime, anywhere – providing you have internet access.

Spreadsheets

If you are currently using spreadsheets, you can either upgrade to software that supports MTD for VAT or continue to use spreadsheets in combination with bridging software.

Since spreadsheets are capable of recording and storing digital records, they can still be a component of the MTD compatible software.

Bridging software

Bridging software is a digital tool which is used to connect accounting software, including spreadsheets, to HMRC, meaning the required information can be reported digitally.

Bridging software can be used if you want to continue using spreadsheets, bespoke accounting software which is not MTD compliant or where partial exemption calculations are involved.

Is my existing accounting software compliant for MTD?

This will depend upon which accounting software you are currently using. Common cloud accounting software packages are all MTD compliant. If you are currently using a bespoke software package, you should contact your software provider to discuss your options.

How we can help

Please get in touch with your usual contact or contact our MTD Advisory Team at mtd@milstedlangdon.co.uk if you would like further information on the expansion of MTD and the different options available to you.

Self-employed businesses and landlords across the UK face a challenging time ahead, as the Government continues to implement its MTD initiative with the rollout of MTD for Income Tax Self-Assessment from April 2026.

The changes required to comply with this new tax system are complex and onerous. Businesses and taxpayers may need to invest in new technology, such as cloud accounting software, and alter their method of recording and reporting accounts and tax information.

We have already helped a wide range of businesses with the initial stages of MTD and can assist you by putting the necessary software, apps and procedures in place.

Please get in touch with your usual contact or contact our MTD Advisory Team at mtd@milstedlangdon.co.uk if you would like any further information on the options available to you.

• MTD for VAT – compulsory since 2019
  • ‘Soft landing period’ ended on 1 April 2021
  • All VAT-registered businesses are required to follow MTD rules since 1 April 2022
• MTD for Income Tax starts from April 2026
• MTD for Corporation Tax will be introduced at a later date

• Landlords – UK and overseas property income
• Sole traders
• Partnerships
• Residents and non-residents

MTD for ITSA will commence in April 2026 for those businesses, such as sole traders, landlords and self-employed workers, with property and/or business income of £50,000 or more.

It will then be rolled out to those with property and/or property income of £30,000 or more from April 2027.

• Exempt for now
  • Those with income of £30,000 or less
  • LLPs
  • Partnerships with a corporate partner
• Exempt indefinitely
  • Digitally excluded
  • Trusts
  • Estates
  • Trustees of registered pension scheme
  • Non-resident companies

• Income from self-employment (separating out trades)
• Income from partnership (reported at partnership level)
• Income from UK property (split into Furnished Holding Lettings and other)
• Income from overseas property

MTD for Income Tax applies if the total gross income from these sources combined exceeds £50,000 by April 2026 or £30,000 from April 2027.

Other income will be reported annually via MTD enabled software

• Maintain digital records at a transactional level
• Digital links between transaction records to tax submissions
• Submissions to HMRC via API enabled software
• Submit summary information to HMRC through quarterly updates
• Submit end of period statement to HMRC

• HMRC will issue an ‘update notice’
• Submit a summary of the last three months information in specified categories
• Accounting adjustments and claims are optional
• Deadline one month following quarter end
• Can submit up to ten days early if no further transactions are expected
• No declaration or inaccuracy penalty
• Separate updates for each MTD income source

• EOPS finalises the figures – one for each MTD income source
• HMRC will issue an ‘End of Period Statement’ notice
• Report missing transactions, corrections and accounting adjustments
• Claim reliefs, allowances, losses etc
• EOPS for a partnership is a full partnership return
• Includes a declaration
• Deadline (almost) the same as the self-assessment deadline

• Finalise the liability for the individual for the tax year
• Bring together all MTD income sources and other income