MTD for VAT applies to businesses with taxable turnover above £85,000, requiring digital record-keeping and quarterly submissions.

From April 2026, MTD for Income Tax affects self-employed individuals and landlords with gross income over £50,000 annually.

You must use compatible software like QuickBooks, Xero, or other HMRC-approved tools to maintain and submit records.

Quarterly updates are due one month after each quarter ends, with a final declaration by 31 January following the tax year.

Digital links are required between all software components to ensure data flows without manual intervention, reducing errors.

Exemptions exist for businesses with turnover below thresholds, those with disabilities, or in cases of insolvency or religious objections.

Penalties for non-compliance include fines based on points system for missed deadlines or inaccurate submissions.

Benefits include reduced administrative burden, fewer mistakes, and real-time visibility of tax liabilities for better planning.

Sign up for MTD through your Government Gateway account and ensure your software is set up before deadlines.

Keep digital records for at least six years, including invoices, receipts, and bank statements, as HMRC may audit them.