Ilyas Patel Accountants in Preston

Making Tax Digital

How is Tax going Digital?

HMRC’s ambition is to become one of the most digitally advanced tax administrations in the world. Making Tax Digital is making fundamental changes to the way the tax system works – transforming tax administration so that it is:

  • – More effective
  • – More efficient
  • – Easier for taxpayers to get their tax right



Making Tax Digital for VAT

VAT-registered businesses with a taxable turnover  are now required to follow the Making Tax Digital rules by keeping digital records and using software to submit their VAT returns.


Making Tax Digital for Income Tax

Self-employed businesses and landlords with annual business or property income above £50,000 will need to follow the rules for MTD for Income Tax from their next accounting period starting on or after 6 April 2026.

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 service for Income Tax. If you are a self-employed business or landlord you can voluntarily use software to keep business records digitally and send Income Tax updates to HMRC instead of filing a Self Assessment tax return.


Making Tax Digital for Corporation Tax

The government has published a consultation on the future design of Making Tax Digital for Corporation Tax and welcomes views from companies and other organisations within the charge to Corporation Tax, agents, professional bodies and software developers.

The government has proposed businesses with an opportunity to take part in a pilot for Making Tax Digital for Corporation Tax in April of 2024.

Helping businesses, self-employed people and landlords get it right first time

The majority of customers want to get their tax right but the latest tax gap figures show that, whilst the numbers have remained at a low, there are still avoidable mistakes costing the Exchequer £35.8 billion (4.8%) in 2021 to 2022. The improved accuracy that digital records provide, along with the help built into many software products and the fact that information is sent directly to HMRC from the digital records, avoiding transposition errors, will reduce the amount of tax lost to these avoidable errors.

The primary legislation for Making Tax Digital relating to VAT and Income Tax is contained in the Finance (No.2) Act 2017, providing certainty about the broad framework in which Making Tax Digital will operate, with secondary legislation for VAT laid in February 2018, which came into force from April 2019.

HMRC have published a VAT Notice which explains the rules for Making Tax Digital for VAT and about the digital information that must be kept.

They have also published a communication pack that supports our partnership working arrangements with stakeholders, who can use the contents to inform their own communications activity and key messages for their clients, customers or members

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