MTD for VAT · UK guide · 2026
Making Tax Digital for VAT: what UK businesses need to know.
Source: gov.uk — MTD for VAT. [VERIFY before acting.]
MTD for VAT — what it requires
Making Tax Digital for VAT applies to all VAT-registered businesses since April 2022. If you are registered for VAT, you must keep digital records and submit VAT returns using HMRC-recognised MTD-compatible software. You cannot use HMRC's old online VAT portal. Non-compliance attracts penalties. [VERIFY: gov.uk]
MTD for VAT: what you need to do
Sign up for MTD for VAT
Register with HMRC for MTD if you haven't already. Most businesses were migrated automatically, but check your HMRC business tax account. [VERIFY at gov.uk]
Choose MTD-compatible software
Install and set up HMRC-approved software (Xero, QuickBooks, FreeAgent, Sage, or similar). Software must be able to submit directly to HMRC's MTD API.
Keep digital VAT records
All VAT-relevant transactions must be recorded digitally. Digital links must connect your records through to the VAT return — no manual re-keying between systems.
Submit VAT returns via software
Every VAT return must be submitted through your MTD-compatible software, not via HMRC's portal. Quarterly for most businesses, monthly if you opt in.
FAQs
What is Making Tax Digital for VAT?
Making Tax Digital for VAT (MTD for VAT) requires all VAT-registered UK businesses to keep digital VAT records and submit VAT returns using MTD-compatible software. MTD for VAT has applied to businesses above the VAT threshold since April 2019, and to all VAT-registered businesses (including those voluntarily registered) since April 2022. [VERIFY: current MTD for VAT requirements at gov.uk/government/collections/making-tax-digital-for-vat]
Does MTD for VAT apply to all VAT-registered businesses?
Yes. Since April 2022, MTD for VAT applies to all VAT-registered businesses — including those voluntarily registered below the £90,000 threshold. If you are registered for VAT for any reason, you must keep digital records and use MTD-compatible software to submit your VAT returns. [VERIFY: current rules at gov.uk]
What software do I need for MTD VAT?
You need HMRC-recognised MTD-compatible accounting software that can submit VAT returns digitally. Common options include Xero, QuickBooks, FreeAgent, and Sage. The software must maintain a digital link from your business records through to the VAT return submission. You cannot submit VAT returns via HMRC's portal any more. [VERIFY: current list of approved software at gov.uk/guidance/find-software-thats-compatible-with-making-tax-digital-for-vat]
What are the MTD VAT digital record requirements?
You must keep digital records of: business name and address, VAT registration number, VAT accounting scheme details, the time of supply and value for each supply, and the rate of VAT charged. The records must be kept digitally and linked to your VAT return submission. Paper records are not acceptable for MTD purposes. [VERIFY: current digital record requirements at gov.uk]
What is the penalty for not using MTD for VAT?
HMRC charges penalties for non-compliance with MTD for VAT requirements — including failing to keep digital records and submitting returns through non-approved channels. The penalty regime for MTD VAT is separate from the usual VAT late filing penalties. [VERIFY: current MTD VAT penalty rules at gov.uk]
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