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Making Tax Digital is a key part of the government’s Tax Administration Strategy. It will help reduce the tax gap by requiring businesses and individuals to:

  • keep digital records
  • use software that works with Making Tax Digital
  • submit updates every quarter, bringing the tax system closer to real-time

HMRC recently published evidence of Making Tax Digital reducing the tax gap.

Making Tax Digital for VAT

If you have a VAT registered business, you are now required to keep digital records and file your tax returns using compatible software.

HMRC will sign up all remaining businesses to Making Tax Digital for VAT automatically unless they are exempt or have applied for exemption.

You should now find software that works with Making Tax Digital for VAT.

If you’re an agent, you should follow the Making Tax Digital for VAT step by step guide for agents.

Making Tax Digital for Income Tax

You need to follow the requirements for Making Tax Digital for Income Tax if you are self-employed or a landlord from:

  • 6 April 2026 if you have an annual business or property income of more than £50,000
  • April 2027 if you have an annual business or property income of more than £30,000

Some businesses and agents are already keeping digital records and providing updates to HMRC as part of a live pilot to test and develop the Making Tax Digital for Income Tax. If you are a self-employed business or landlord, check if you can voluntarily sign up now through your software provider.

If you’re signing up your own business, you should use the step-by-step guide for Making Tax Digital for Income Tax to get started.

If you’re an agent, you should follow the Making Tax Digital for Income Tax step by step guide for agents.

Legislation

Primary legislation relating both to VAT and Income Tax is contained in the Finance (No.2) Act 2017. This provided certainty about the broad framework of Making Tax Digital.

Secondary legislation for VAT came into force for businesses with a taxable turnover above the VAT threshold from April 2019. From April 2022, revised secondary legislation came into effect, mandating VAT registered businesses with taxable turnover below the threshold to meet the VAT requirements.

Find out more about the requirements for VAT and what digital information must be kept.

The secondary legislation for Making Tax Digital for Income Tax was laid in September 2021, providing further detail on the design of the system.