What Making Tax Digital is
Making Tax Digital is a government initiative to improve tax administration. Ensure you meet HMRC requirements.
April 2022 extension
From April 2022, MTD requirements extend to smaller VAT businesses. Around 1.1m businesses will be affected.
Based on taxable turnover
MTD for VAT is currently mandatory for VAT-registered businesses with a taxable turnover above £85,000.
MTD software needed
Businesses need to use compatible, HMRC-recognised MTD software to keep digital records and file VAT returns.
Maintain digital records
Through MTD, VAT-registered businesses will be required by law to maintain their digital records.
More about Making Tax Digital for VAT and Xero
Xero’s Making Tax Digital software works for VAT and non-MTD VAT returns. Once you sign up for MTD, you can only submit MTD VAT returns. All VAT-registered businesses will need to use MTD VAT returns from April 2022 (unless you have an exemption).See how to set up MTD for VAT in Xero
If you use spreadsheets for VAT, you can still connect to HMRC’s MTD system via Xero. Xero provides bridging software that lets you upload VAT amounts, then send MTD VAT standard rate returns from Xero.See how to get VAT data into Xero from spreadsheets
MTD for ITSA will apply from April 2024. Unincorporated businesses and landlords with a total income above £10,000 per year will have to keep digital records and submit quarterly updates, an End of Period Statement, and a final declaration to HMRC.Learn more about MTD for ITSA
Set up for MTD with Xero
Get started in a few steps. Any Xero plan that supports VAT is compatible with Making Tax Digital.
Sign up for MTD
Log in to HMRC and sign up for Making Tax Digital.
Connect Xero to HMRC
You’ll receive a confirmation email, and be guided to connect HMRC digital tax with Xero.
Use the correct VAT filing
Use the MTD VAT return, and submit it to HMRC directly from Xero.
Explore more MTD news and resources
Making Tax Digital for VAT
All VAT supporting Xero plans cover MTD at no extra cost. Find out more about how Xero and MTD works.
Making Tax Digital software
Learn more about why you need Making Tax Digital software that’s 100% HMRC compliant.