Are you prepared?

A guide to
Making Tax Digital

A fully digital tax system

Making Tax Digital, also known as MTD, is a government initiative that sets out a bold vision for a digital tax system. The aim of the initiative is to make tax administration more effective, more efficient and easier for taxpayers, through the implementation of a fully digital tax system.
The full range of HMRC services are due to be available through digital tax accounts by 2020.

MTD Timelines

  • April 2017

    Pilot of roll out starts

    July-December 2017

    Digital tax accounts show taxpayers an overview of their liabilities in one place

    July-December 2018

    Most businesses, self-employed people and landlords start updating HMRC quarterly for income tax and national insurance obligations through accounting software

    2019

    Most businesses, self-employed people and landlords start updating HMRC quarterly for VAT obligations through their accounting software

    Online accountancy software

    We've partnered with FreeAgent to give our small business banking customers an online cloud accounting software, completely free of charge.

    2020

    The full range of HMRC services becomes available through digital tax accounts

MTD myths. Busted.

No. Businesses will not need to file four tax returns a year. The new digital accounts will integrate all the different information businesses already provide to HMRC into a simple, streamlined system.

Instead of one big, onerous tax return each year once a quarter businesses can check that the information they are collecting digitally is correct, and simply click "send" to update HMRC.

There is no question of forcing those who cannot go digital to do so. Help will be available for businesses who struggle to use digital tools.

People who genuinely can't use digital tools will be offered alternatives, like nominating someone else to update their information for them, or giving information by phone.

Millions of firms already manage their tax online. 99% of VAT returns are done online, 98% of Corporation Tax and 86% of Self-Assessment returns are done online.

Many taxpayers want more certainty over their tax bill and access to an in-year picture of their tax position, which their new digital accounts will provide. 

No additional records are needed for increased digitisation. These changes will contribute to our target to reduce business burdens by £400m.

For those who aren't already keeping records digitally, there will be free software and clear, simple advice on how it can be used. 

Not true. The scope for error will be greatly reduced - meaning fewer businesses face the shock of a bigger tax bill than they expected at the end of the year.

Annually £6.5bn is lost through error. These reforms will improve the quality of record keeping and reduce mistakes.