MTD for accountants and bookkeepers
Making Tax Digital for VAT is changing the way accountants and bookkeepers manage clients’ tax obligations to HMRC.
Making Tax Digital for VAT timeline
The first phase of Making Tax Digital for VAT began in 2019. VAT-registered businesses with a taxable turnover above the VAT threshold (£90,000) were mandated to keep digital records and submit returns using compatible software.
In April 2022, this mandate was extended to all VAT-registered businesses (with a few exemptions).
MTD for Income Tax (IT)
From April 2026, Making Tax Digital for IT will apply to sole traders and landlords with a total business and/or property income above £50,000 per year.
Sole traders and landlords earning above £30,000 will follow in April 2027. And, sole traders and landlords earning above £20,000 will follow in April 2028.
Under MTD for IT, sole traders and landlords will need to submit cumulative quarterly updates to HMRC, as well as a Final Declaration.
Keep clients informed about Making Tax Digital
As Making Tax Digital for accountants and bookkeepers is changing, it’s a good idea to keep your clients in the know about what will be required of them. If they join Making Tax Digital for VAT or Income Tax they must keep digital business records and:
- for VAT, submit their returns to HMRC using MTD-compatible software
- for Income Tax, provide summary updates of income and expenses to HMRC every quarter and finalise their tax using MTD-compatible software
Xero and the benefits of Making Tax Digital for accountants
For accountants and bookkeepers, online accounting has many benefits. It can save time, improve accuracy and encourage collaboration with clients, ultimately giving your clients transparency and more control over their finances.
Xero is HMRC-recognised and can be used to calculate VAT and file VAT returns online securely. Find out more about submitting VAT returns easily with Xero.
Signing up your clients for Making Tax Digital for VAT
Clients are automatically signed up for MTD for VAT when they register for VAT. There’s no need to sign them up for MTD for VAT separately, just make sure they’re registered for VAT.
MTD resources for accountants and bookkeepers
Explore our accounting and bookkeeper guides, articles, and webinars covering everything you need to know about Making Tax Digital for VAT, including how to support your clients with the shift to MTD.
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