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Making Tax Digital Timeline | Key dates for MTD

September 13, 2022
Making Tax Digital (MTD) is officially underway, with Making Tax Digital for VAT fully rolling out in April 2022.

With Making Tax Digital for Income Tax Self Assessment (MTD ITSA) and Corporation Tax due to roll out in the next few years, we’ve broken down HM Revenue and Customs’ (HMRC) Making Tax Digital timeline, what’s compulsory at the time of writing and what the future holds for small business owners and self-employed taxpayers.

Making Tax Digital timeline

The key dates on HMRC’s Making Tax Digital timeline are as follows:
Making Tax Digital timeline from 2019 to 2026

Making Tax Digital for VAT

At the time of writing, Making Tax Digital for VAT has been fully rolled out, with no further updates or amendments proposed for how business owners report and pay VAT to HMRC.
Initially launched in April 2019, MTD for VAT extended only to VAT-registered business owners earning above the £85,000 VAT registration threshold. At this moment in time, VAT-registered business owners earning below the threshold were under no obligation to follow MTD for VAT rules.

Now, as of April 2022, MTD for VAT has been compulsory for all VAT-registered business owners, irrespective of their taxable turnover. This means that MTD for VAT has expanded to encompass small business owners earning beneath the VAT registration threshold who chose to voluntarily register their businesses for VAT.

What do I have to do under MTD for VAT?

Under MTD for VAT, all VAT-registered business owners must:
    File VAT Returns using MTD-compatible software. This can be either bridging software or accounting software. Store VAT records digitally, either using spreadsheets or accounting software.
Before getting started, you’ll need to register your business for Making Tax Digital for VAT, as long as you’ve come to the end of your current accounting period, and will need to have MTD-compatible VAT software in place. You can find the full list of MTD-compliant software over at GOV.UK, but to save you from scrolling we can confirm that Ember is MTD for VAT approved.

Following the initial launch of MTD for VAT in April 2019, the government introduced a soft-landing period that gave business owners time to adopt digital links.Digital links convert data sorted in digital records into MTD-compatible data. As a result, these links act as a channel between your software and HMRC’s systems.
These digital links can be found in MTD-compatible accounting software and bridging software.

Prior to the introduction of digital links, business owners could copy and paste data into their digital VAT Returns. However, since one of the core goals of MTD is to increase the accuracy of tax returns submitted by small businesses and self-employed people, copying and pasting information over still leaves a lot of scope for slipping up.
This ‘soft-landing period’ allowed business owners to continue copying and pasting their data while they found the right VAT Return online software for their businesses. Initially, this was due to end in April 2020, but was postponed until April 2021.

Making Tax Digital for Income Tax Self Assessment

Making Tax Digital for Income Tax Self Assessment is the next phase of MTD to roll out, with all eligible individuals expected to be registered by 6th April 2024.You’ll need to be registered by this date if you:
    Are an individualAre registering for Self AssessmentWere self-employed or collecting property income before 6th April 2023Have a qualifying income of more than £10,000
If you’re in a general partnership and meet the following criteria, you’ll need to register for MTD for ITSA by 6th April 2025:
    Have a qualifying income above £10,000Only have individuals as partners
If you’re in a different type of partnership — for example, a limited liability partnership — the MTD for ITSA registration deadline will be announced by HMRC closer to the time.
If you became self-employed or a landlord after April 2023, you won’t need to meet the Making Tax Digital for Income Tax requirements until you’ve submitted your first Self Assessment tax return. You can, however, choose to voluntarily register your business for MTD for ITSA at any point.

What do I have to do under MTD for ITSA?

If you’re a sole trader or landlord, as of 6th April 2024 you’ll need to:
    Have registered your business for Making Tax Digital for Income TaxSend quarterly updates to HMRC detailing your business income and expenditureSubmit an End of Period Statement (EOPS) at the end of your fourth quarter summarising your business income and expenditure across the yearFile a Final Declaration with details of all other taxable income by 31st January every yearStore digital accounting records using MTD-compatible software

Making Tax Digital for Corporation Tax

While the date for MTD for Corporation Tax is still currently undecided, HMRC has announced the this legislation won’t come into effect until 6th April 2026 at the earliest.

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