Making Tax Digital is a UK government initiative that aims to make tax administration simpler, more effective and more efficient by digitising record keeping and tax reporting.
First announced in 2015, Making Tax Digital has been delayed several times. The eventual roll-out of Making Tax Digital began with VAT in April 2019.
Initially, Making Tax Digital for VAT only applied to those businesses with turnover above the VAT threshold in force at the time. Making Tax Digital for VAT was extended to all VAT-registered businesses, regardless of turnover, in April 2022.
Making Tax Digital is now being extended to income tax. From April 2026, sole traders, self-employed business owners and landlords with annual business income of more than £50,000 per year will be required to:
- Use MTD-compliant accounting software.
- Keep digital records of income and expenses.
- Submit quarterly digital updates to HMRC.
- File an annual report online.
Making Tax Digital for Income Tax will be further extended to those with income above £30,000 per year from April 2027, and to those with income above £20,000 per year from April 2028. It is also expected that Making Tax Digital will be extended to members of partnerships and limited liability partnerships and sole traders and landlords with income below £20,000 per year.
The implementation date for Making Tax Digital for Corporation Tax is yet to be announced.
