What is Making Tax Digital?

Making Tax Digital (MTD) is an initiative by the UK Government to modernise the tax system by requiring businesses and individuals to maintain digital records and submit tax information electronically. 

Under MTD, taxpayers must use government-approved software to keep accurate digital records and file returns, such as VAT, on a quarterly basis, thus moving the tax system towards real-time reporting. The objective of MTD is to improve accuracy, reduce errors, and close the tax gap by streamlining tax administration and ensuring compliance through digital means. This requirement applies to VAT-registered businesses and, eventually, to other types of taxes as the programme expands.