Understanding the Making Tax Digital Deadlines is critical, MTD is a pivotal initiative by the UK government aimed at modernising the tax system, making it more efficient, accurate, and simpler for taxpayers to get their tax right. Implemented by HM Revenue and Customs (HMRC), MTD requires businesses and individuals to maintain digital records and submit tax returns via MTD-compatible software. This transition from traditional paper-based methods to digital tax reporting is a significant shift, with various deadlines that businesses must adhere to in order to remain compliant.

Understanding these timelines and Making Tax Digital deadlines is crucial for all businesses, large or small. Non-compliance can lead to penalties, disruption to business operations, and additional stress. This article outlines the key dates and deadlines you need to be aware of to stay compliant with MTD regulations.

Making Tax Digital for VAT

Initial Rollout (April 2019)

The first phase of MTD was rolled out in April 2019, targeting VAT. Businesses with a taxable turnover exceeding the VAT threshold of £85,000 were required to:

  • Keep digital records of their VAT transactions.
  • Submit VAT returns using MTD-compatible software.

This phase represented a major shift for many businesses, necessitating the adoption of new processes and, in some cases, the acquisition of new software. The introduction of MTD for VAT aimed to reduce errors, improve VAT return accuracy, and simplify tax management for businesses.

Extension to All VAT-Registered Businesses (April 2022)

In April 2022, MTD for VAT was extended to all VAT-registered businesses, regardless of turnover. This expansion brought many smaller businesses into the MTD framework, requiring them to:

  • Transition to digital record-keeping.
  • Submit their VAT returns digitally.

For many small businesses, this required quick adaptation to new digital processes, often involving the implementation of MTD-compatible accounting software.

Key Deadlines for MTD VAT

  • April 2019: MTD for VAT becomes mandatory for businesses with a taxable turnover above £85,000.
  • April 2022: All VAT-registered businesses, regardless of turnover, must comply with MTD for VAT.
  • Ongoing Deadlines: VAT-registered businesses must continue to meet quarterly VAT return deadlines based on their VAT accounting periods.

Making Tax Digital for Income Tax Self-Assessment (MTD ITSA)

MTD ITSA Overview

Following the successful implementation of MTD for VAT, the next significant phase is Making Tax Digital for Income Tax Self-Assessment (MTD ITSA). This phase will affect self-employed individuals, landlords, and partnerships, requiring them to maintain digital records and submit quarterly updates to HMRC via MTD-compatible software.

Currently, most self-employed individuals and landlords submit their income tax returns annually. However, under MTD ITSA, these taxpayers will need to submit updates quarterly, allowing HMRC to receive more frequent information on income and expenses.

Key Deadlines for MTD ITSA

  • April 2026: MTD ITSA becomes mandatory for self-employed individuals and landlords with an annual business or property income above £50,000.
  • April 2027: The MTD ITSA requirement is extended to those with an income between £30,000 and £50,000.

Quarterly Submission Deadlines

Once MTD ITSA applies, taxpayers must submit quarterly updates, with the following deadlines:

  • Q1 (6th April – 5th July): Update due by 5th August.
  • Q2 (6th July – 5th October): Update due by 5th November.
  • Q3 (6th October – 5th January): Update due by 5th February.
  • Q4 (6th January – 5th April): Update due by 5th May.

Additionally, there will be a requirement to submit a final end-of-period statement and a final declaration to determine the final tax liability.

Making Tax Digital for Corporation Tax (MTD CT)

MTD for Corporation Tax Overview

The next phase of the MTD programme will focus on Corporation Tax. MTD for Corporation Tax (MTD CT) will require companies to maintain digital records and use MTD-compatible software for submitting their Corporation Tax returns. While this phase is still under consultation and in the pilot stage, businesses should start preparing now.

Proposed Deadlines for MTD CT

  • 2026 (Proposed): HMRC has suggested that MTD for Corporation Tax could become mandatory by 2026, following the ongoing consultations and results from the current pilot programme.

While the exact date is yet to be confirmed, businesses are advised to begin reviewing their current systems and considering necessary changes to comply with future MTD CT requirements.

Penalties for Missing Making Tax Digital Deadlines

Overview of Penalties

Missing MTD deadlines can result in penalties from HMRC. These penalties are designed to encourage compliance and can vary depending on the severity and frequency of the non-compliance. Common penalties include:

  • Late Submission Penalties: An initial penalty is applied if a deadline is missed, with repeated failures resulting in higher fines.
  • Daily Penalties: Continued non-compliance can lead to daily fines until the required submission is made.
  • Additional Surcharges: In some instances, additional surcharges may be imposed on top of the standard penalties, especially for persistent non-compliance.

How to Avoid Penalties

To avoid penalties, it’s crucial to:

  • Use MTD-Compatible Software: Ensure that your business is using software that complies with MTD requirements.
  • Maintain Digital Records: Regularly update your digital records to ensure you have all the necessary information ready for submission.
  • Be Aware of Deadlines: Keep track of all relevant VAT, Income Tax, and Corporation Tax deadlines.
  • Seek Professional Assistance: Consider engaging a professional accounting firm like LT Accounting to manage your MTD obligations and ensure compliance with deadlines.

How LT Accounting Can Help with MTD Compliance

Comprehensive Services

At LT Accounting, we provide a full range of services to help businesses comply with MTD requirements, including:

  • VAT Returns: We ensure that your VAT returns are accurate and submitted on time using MTD-compatible software.
  • Self-Assessment: For self-employed individuals and landlords, we support all aspects of MTD ITSA, from digital record-keeping to quarterly submissions.
  • Corporation Tax: As the MTD for Corporation Tax deadline approaches, we can assist in preparing your business for compliance, including reviewing current processes and advising on necessary changes.

Tailored Support

We recognise that every business is unique. At LT Accounting, we offer personalised support to meet your specific needs, whether you’re a sole trader preparing for MTD ITSA or a larger business getting ready for MTD CT. Our team provides expert advice and practical solutions to ensure you stay compliant and avoid penalties.

Navigating the complexities of MTD can be challenging, especially with the constant updates and changes. LT Accounting is here to help you stay ahead of these changes and manage your tax affairs efficiently.

Conclusion

Staying compliant with Making Tax Digital is essential for all UK businesses. Understanding the key Making Tax Digital deadlines for VAT, Income Tax, and Corporation Tax is critical to avoiding penalties and ensuring smooth business operations.

By keeping track of these Making Tax Digital deadlines and leveraging the expertise of professionals like LT Accounting, you can focus on running your business while confidently meeting your tax obligations.

For more information or assistance with MTD compliance, contact LT Accounting today. We’re here to help you navigate the complexities of the UK’s evolving tax system.