I am VAT Registered and NOT Using MTD-Compliant Software
What does Making Tax Digital (MTD) mean for me?
From April 2026, HMRC will require individuals with more than £50,000 in combined turnover from self-employment, UK property, or foreign property to maintain digital records and submit tax data quarterly.
You are receiving this email because you are VAT registered but are not currently using MTD-compliant software. This means changes will be required in how you record and report income to HMRC — even if you’re already filing VAT returns under MTD for VAT.
What to Expect Between Now and April 2026
Here is a rough timeline of what to expect:
April 2025: HMRC Letters Begin
Mid-2025 to Early 2026
Now is the best time to upgrade your systems and begin using MTD-compliant software that can handle both VAT and Income Tax.
7 August 2026: Quarterly Submissions Begin
Quarterly submissions to HMRC will be required on:
- 7 August
- 7 November
- 7 February
- 7 May
Followed by a final declaration due 31 January annually (similar to your Self Assessment).
What You Need to Do Now
1. Separate Your Accounts
Use a dedicated business account. If you also have rental income, set up a separate account for that too.
2. Enable Online Banking
Ensure you have online banking for your business bank account. It is sssential for linking your transactions with digital software.
3. Understand the New Reporting Requirements
You’ll need to submit quarterly updates for each qualifying income stream, plus a final annual declaration.
4. Adopt MTD-Compliant Software
Explore HMRC’s approved software options. We recommend Xero, but FreeAgent (free with NatWest/Mettle/Ulster Bank) is another solid choice.
5. Book Your Onboarding Call
We’ll help you select the right software, develop a plan, and ensure you’re ready well before April 2026.
6. Understand the Opt-Out Process
How Exchange Can Help
- We’ll recommend and implement MTD-compliant software
- We’ll manage submissions and keep you compliant
- We’ll guide you if your HMRC letter appears incorrect
What We Can't Do
- Apply for exemptions on your behalf — but we can advise you how
The Upside of MTD
Fewer follow-ups:
Real-time data access means less chasing
Leave it to us:
We’ll handle submissions so you don’t have to.
The Downside of MTD
Each quarterly submission must be approved by you.
Software subscriptions are required — but are tax deductible.
More filings = more work = higher fees (also tax deductible). We’ll confirm final fee updates once HMRC provides full guidance.
