Making Tax Digital (MTD) is one of the biggest changes to the UK tax system in recent years — yet many small business owners are still unclear on what it means for them.
This guide explains Making Tax Digital in plain English, who needs to comply, and what you need to do to stay on the right side of HMRC. 👉 See our MTD for ITSA explained page
What Is Making Tax Digital?
Making Tax Digital is an HMRC initiative designed to:
- Reduce errors
- Improve record-keeping
- Move tax reporting fully online
Under MTD, businesses must:
- Keep digital accounting records
- Use HMRC-compatible software
- Submit returns directly through that software
Who Needs to Comply with MTD?
MTD for VAT (Currently Live)
You must follow MTD rules if:
- You are VAT-registered (regardless of turnover)
This applies to:
- Sole traders
- Limited companies
- Partnerships
VAT returns can no longer be submitted manually through the HMRC portal.
What About Income Tax & Corporation Tax?
- MTD for Income Tax: expected to apply to self-employed individuals and landlords in the coming years
- MTD for Corporation Tax: planned but not yet mandatory
Preparing early is strongly recommended.
What Software Do You Need for MTD?
To comply with MTD, you’ll need HMRC-approved software such as:
- Xero
- QuickBooks
- FreeAgent
Spreadsheets alone are not enough — they must be connected via bridging software.
Not sure if you’re MTD-compliant?
Many small business owners assume they’re compliant — until HMRC rejects a return.
👉 Check your MTD setup with Atreus Accountants
Common MTD Mistakes Small Businesses Make
❌ Leaving setup until the last minute
❌ Assuming an accountant “handles it automatically”
❌ Using incompatible software
❌ Not understanding submission deadlines
These mistakes can lead to penalties, rejected returns, or late filing fines.
How Atreus Accountants Can Help
We help small businesses:
- Set up MTD-compliant software
- Submit VAT returns correctly and on time
- Prepare for future MTD changes
- Reduce errors and HMRC stress
Whether you’re newly VAT-registered or already struggling with MTD, we make the process simple and manageable.
👉 Speak to Atreus Accountants to get MTD-ready with confidence.
FAQ: Making Tax Digital
Do I need MTD if my turnover is low?
Yes — if you’re VAT-registered, MTD applies regardless of turnover.
Can I still submit VAT manually?
No. HMRC requires digital submissions via approved software.
Is Making Tax Digital mandatory for small businesses?
Yes — if you’re VAT-registered, MTD is mandatory regardless of turnover.
Can I still use spreadsheets for MTD?
Only if they’re linked to HMRC via bridging software — spreadsheets alone are not compliant.
What happens if I don’t comply with MTD?
You may face penalties, rejected VAT returns, and increased HMRC attention.
Does my accountant automatically handle MTD?
Not always. You should confirm your accountant is submitting returns using MTD-compliant software.
Making Tax Digital doesn’t need to be complicated.
We help small businesses set up the right software, stay compliant, and submit VAT returns correctly — every time.
👉 Talk to Atreus Accountants about MTD support