Making Tax Digital
What is "Making Tax Digital" and how will it affect my business?

Making Tax Digital (MTD) – VAT

Making Tax Digital (MTD) for VAT is part of HMRC’s plan to digitise the UK taxation system. Initially, MTD only applied to VAT registered businesses with turnover in excess of the VAT registration threshold (currently £85,000). 

From April 2022, all VAT registered businesses are required to keep digital VAT records and submit VAT returns via MTD compliant software.

All voluntarily VAT-registered businesses with a turnover of less than the £85,000 threshold will have to comply with the MTD legislation from 1st April 2022. (this applies to the first VAT Return starting on or after April 2022).

What will change when registering for MTD?

Once your business has signed up to MTD for VAT, you will be required keep digital VAT records and use Making Tax Digital-compatible software to complete the following tasks:

  • Updating your VAT records
  • Generating new VAT returns
  • Submitting new VAT returns to HMRC online (you will no longer be able to file your VAT Return through the HMRC Website).

Is MTD a legal requirement?

Businesses with a turnover of more than the VAT threshold have been required to comply with Making Tax Digital for VAT since April 2019.

From April 2022, all VAT registered businesses must legally comply with MTD, regardless of their turnover.

What records must I store digitally?

You are required to store the following records within your MTD compatible software-

  • Business Name
  • VAT Registration Number
  • The primary address of your business
  • Details of any VAT Schemes used
  • The date, value and VAT rate for all invoices raised
  • The date, value and amount of VAT claimed on each supplier invoice

Are there any exemptions from MTD?

Very few businesses will be exempt from MTD although HMRC will accept reasons such as your age, any disabilities, religious grounds or remote location as an exemption from MTD.

When should I register for MTD if not yet registered?

If you are not yet registered for MTD, you should do so before the due date of the next period commencing on or after April 2022.

You should register no later than 7 days before your first VAT Return under MTD is due. 

You can sign up your business for MTD online using your Government Gateway login details.

Need help?

Do feel free to contact us if you need more advice in relation to MTD or would like to discuss any other matter.

Get in touch today for a free consultation and find out how we can help your business grow.