Filing your VAT Return Through Making Tax Digital

What’s the reason for Tax Digital?

Making Tax Digital (MTD) is designed to make it simpler as well as more effective for companies as well as individuals to track and report the tax they owe to HMRC. In the new regulations, HMRC legally requires businesses that are eligible to keep records of transactions electronically and send tax returns to HMRC with Making Tax Digital compatible software.

The new rules won’t affect the normal deadlines for VAT returns or the information you have to provide. You can find out the date your next tax return is due by checking the on-line VAT account.

What information must be kept digitally?

MTD can alter your bookkeeping process as well as the way your business records data. It is essential to be able to keep digital records and the digital copy of your transactions. Further information on the records you have to keep in digital format on the website of HMRC.

I already keep digital records. What’s different about Making Tax Digital for VAT? 

Every VAT-registered business must keep books, records and accounts Most are maintaining these electronically. With MTD the most significant change is that you will need to make use of the Making Tax Digital software to file your VAT return with HMRC.

Here’s what you’ll need to do in order to be compliant with the new law so that you don’t get caught with penalties for not complying.

Create a strategy

It’s time to be clear about your strategy. In the event that you’ve got an accountant looking for your bookkeeping, talk with them about what the changes will mean. For instance, you might have to establish an approach to share data and records in digital format.

If you manage your own accounts with spreadsheets, manual records or paper-based bookkeeping, or if you’re keeping your financial records digitally, you’ll need to utilize MTD suitable programs to upload your data to the brand HMRC website.

What software is compatible?

It is essential to preserve your records digitally using the VAT-compliant software that integrates with HMRC systems. Enables users to keep and update records such as VAT receipts and invoices electronically.

The item has to be capable of:

• Keep and archive digital records as required by the regulations.
• make VAT returns using these documents
• Connect with HMRC via an electronic link

Certain MTD solutions include the ability to bridge. Which allows you to digitally connect the data from a spreadsheet into HMRC’s system.

Selecting MTD compatible software

You won’t be registered for VAT MTD immediately.

This procedure instructs HMRC to move your current VAT accounts from the previous HMRC computer system and transfer it into the current MTD computers. After you have completed this step, it may be HMRC as long as 72 hours in order to copy your account over. It’s a one-time procedure that takes about three hours in total.

To join you’ll need the following items on hand:

• Your business email address
• Government Gateway user ID and password ( if you don’t have one, you can make new account)
• VAT registration number
• The most recent VAT return

Is Tax Making Digital Only in relation to VAT?

No. from April 2026, self employed landlords and individuals with earnings of more than  £50,000 will need to keep electronic documents. Report quarterly reports on their expenditure and income to HMRC via MTD-compatible software. Those earning between  £30,000 and  £50,000 will have to start this process beginning in April 2027.

HMRC includes an online webinar that you can view online to find out more about the procedure and how to join this Making Tax Digital for Income Tax Self-Assessment Pilot. HMRC is also provides helpful videos. Resources and webinars targeted at entrepreneurs to find out more about how you’ll be affected and what actions you’ll need to follow.