Making Tax Digital
Understand digital records, compatible software, VAT requirements and MTD for Income Tax.
Making Tax Digital explained
Making Tax Digital is not one single return. It is a set of digital-record and software-based reporting requirements. VAT has its own MTD rules, while MTD for Income Tax is being introduced for qualifying sole traders and landlords from April 2026.
This learning path covers UK rules and ReturnDeck’s UK form set. Check the effective period and official source before using a rule for a live filing.
Learn it in stages
Beginner · What “digital” means
Digital records are records created and stored in compatible software. For MTD for Income Tax, relevant self-employment and property income and expenses must be recorded digitally, while supporting documents such as invoices and bank statements still matter.
2026 · Who enters MTD for Income Tax
From 6 April 2026, qualifying sole traders and landlords with qualifying income over £50,000 based on the relevant earlier return enter MTD for Income Tax. The threshold falls to over £30,000 from April 2027 and over £20,000 from April 2028 under the current rollout.
Intermediate · Quarterly updates
MTD for Income Tax requires compatible software to maintain digital records and send quarterly updates. The quarterly updates are not four separate final tax returns; year-end adjustments and the tax return complete the annual process.
Advanced · Software, corrections and final return
Learn software authorisation, digital links, correcting records, adding or ceasing income sources, year-end adjustments and submission of the tax return through compatible software. Keep VAT MTD and Income Tax MTD obligations distinct.
Example: sole trader entering MTD
A sole trader’s 2024–25 return shows qualifying self-employment/property income above £50,000. For 2026–27 they establish compatible software, create digital income/expense records, send quarterly updates, correct errors when identified, make year-end adjustments and submit the tax return through the MTD process by the applicable Self Assessment deadline.
Apply this in Practice Mode →Common mistakes to avoid
- Assuming every Self Assessment taxpayer enters MTD in April 2026
- Treating quarterly updates as four final tax calculations
- Keeping totals in software but losing the underlying supporting records
- Confusing MTD for VAT with MTD for Income Tax
- Waiting until year end to correct known digital-record errors
Records and preparation checklist
Before calculating or filing, assemble the evidence that supports the position. This makes the return easier to complete and easier to explain later.
- Check whether the person and income sources are in scope
- Confirm qualifying income and start date
- Choose and authorise compatible software
- Create and maintain required digital records
- Schedule quarterly updates and year-end work
- Keep supporting documents and correction history
Key terms
For MTD Income Tax rollout, broadly the relevant gross income/turnover from self-employment and property used to determine entry.
Software capable of meeting the relevant MTD digital-record and submission requirements.
A periodic summary sent from digital records; it is not the final annual tax return.
Required income/expense information created and stored in software.
Follow the lesson into the form
ReturnDeck’s 1,139 mapped UK fields connect form codes to plain-English meaning, applicability, source figures, calculation notes, examples, common mistakes, interactions and HMRC sources.
Calculate and check
Use the related ReturnDeck calculator or checker to turn the lesson into a practical result where the verified rules support deterministic calculation.
Open related tool →Practice what you learned
Move from learning into a fictional case file, source documents, return completion, validation and a worked answer. Practice Mode never submits anything to HMRC.
Continue to practice →Official HMRC / GOV.UK sources
These are the primary official sources for this learning path. ReturnDeck summarises them for learning; the official material remains the authority.
Source set reviewed for ReturnDeck’s 2026 UK learning layer. Tax rules change; verify the effective date for a live decision.