Do I need MTD software?

MTD — frequently asked questions

What is Making Tax Digital (MTD)?

Making Tax Digital is HMRC's programme requiring businesses and individuals to keep digital records and submit tax returns using compatible software. MTD for VAT is already mandatory for all VAT-registered businesses. MTD for Income Tax Self Assessment (ITSA) is being phased in from April 2026.

Is MTD for VAT compulsory for all VAT-registered businesses?

Yes. Since April 2022, all VAT-registered businesses must use MTD-compatible software to keep digital VAT records and submit VAT returns. There is no minimum turnover threshold — if you are VAT-registered, MTD for VAT applies.

When does MTD for Income Tax Self Assessment start?

MTD ITSA is being phased in: from 6 April 2026 for self-employed individuals and landlords with qualifying income over £50,000; from 6 April 2027 for those with income over £30,000. HMRC has not yet announced a mandatory date for income below £30,000.

What counts as qualifying income for MTD ITSA?

Qualifying income means your combined gross income from self-employment and UK property. Employment income, dividends and other income do not count towards the MTD ITSA threshold.

Can I volunteer for MTD ITSA before it is mandatory?

Yes. HMRC runs a voluntary pilot for MTD ITSA. Signing up early lets you test the process and submit quarterly updates instead of a single annual return. Check HMRC's eligibility criteria before joining the pilot.