Making Tax Digital

What does this even mean?

Making Tax Digital (MTD) is part of the Government’s Tax Administration strategy, looking to reduce the gap between the tax HMRC believes it should receive and what it actually does receive.

MTD requires reporting businesses to:

  • Keep digital records.
  • Use software that works with MTD.
  • Submit updates each quarter, bringing the tax system closer to real-time.

So far so good,but what does this mean in practice?
To date, MTD has been introduced for VAT reporting. To understand how this works, see our guidance Making Tax Digital for VAT.

Making Tax Digital for Income Tax Self-Assessment has been delayed many times by HMRC, it is now planned to be phased in from April 2026.

This sounds like a long time away. It isn’t! Read our guidance Making Tax Digital Income Tax Self-Assessment to learn what you need to be doing now.

Who is exempt from MTD ITSA?
Not everyone will need to comply with MTD ITSA. For example:

  • Personal representatives of deceased individuals.
  • Some Trustees.
  • Trustees of Charitable Trusts.
  • Trustees of non-registered pension schemes.
  • Lloyds underwriters – but only for their underwriting business.