Making Tax Digital for VAT, explained

Reviewed July 2026. Figures are correct at the date of review. Always check GOV.UK for the latest.

What actually changed (and what didn’t)

Less than people fear. What changed is the method: records must be kept digitally, and returns must be filed through software rather than typed into the HMRC website. What didn’t change is the timing or the sums: the same quarters, the same deadlines, the same VAT. If you were already using Xero, QuickBooks or similar, you were most of the way there already.

Who it applies to

Every VAT-registered business, with no turnover floor. Whether you registered because you crossed the £90,000 threshold or chose to register voluntarily, MTD for VAT applies to you.

The software you need

You need software that keeps digital records and can file directly with HMRC. That can be a full accounting package (Xero, QuickBooks, Sage, FreeAgent and others) or, if you keep records in spreadsheets, “bridging software” that links the spreadsheet to HMRC. The key requirement is a “digital link”: your figures should flow from record to return without being manually retyped.

Deadlines and penalties

Your VAT return and payment are due one month and seven days after your VAT period ends, so a quarter ending 31 March is due by 7 May. Late returns and payments fall under HMRC’s points-based penalty system, with interest and penalties on late payment. We won’t sugar-coat that part: it’s the bit that costs money. It’s also the bit that disappears entirely when the records are set up properly and the deadlines are tracked for you.

MTD for VAT vs MTD for Income Tax

Don’t mix them up. MTD for VAT is here now, for VAT-registered businesses. MTD for Income Tax is separate and arrives from April 2026 for sole traders and landlords over £50,000. If both will apply to you, it’s worth getting your digital record-keeping right once, so it covers both.

Want MTD for VAT handled end to end? Take our 2-minute quiz, or see how our VAT service works.