All VAT-registered businesses in the UK must comply with Making Tax Digital (MTD), HMRC’s initiative to modernise tax administration. Since April 2022, VAT-registered businesses have been required to keep digital records and submit VAT returns using compatible software.

MTD makes tax filing simpler, more accurate, and fully digital. Instead of typing figures manually into HMRC’s website, businesses must keep digital records and submit VAT returns using HMRC-approved accounting software.

The hope is this will lead to fewer mistakes or non-compliance, which is good for HMRC, while also meaning less paperwork for you and more time to focus on growing your business.

What Is Making Tax Digital?

Making Tax Digital (MTD) is part of HMRC’s long-term plan to create a modern, digital tax system. Under MTD, businesses must keep their VAT records digitally using functional compatible software that connects directly to HMRC’s API, and file VAT returns through that software, rather than manually.

This means every VAT transaction, from invoices to payments, should be recorded and submitted electronically.

Who Needs to Follow MTD?

As of 2026, MTD for VAT applies to all VAT-registered businesses, regardless of turnover. That includes:

• • Businesses above the VAT threshold

• • Voluntarily registered businesses below the threshold

Furthermore, since April 2026, MTD for Income Tax affects many sole traders and landlords.

Key Requirements for MTD VAT

To stay compliant, you’ll need have the following responsibilities:

Exemptions and Special Cases

HMRC recognises that not everyone can go digital. You may apply for an exemption if:

• • It’s not practical due to age, disability, or poor internet access

• • You’re subject to insolvency proceedings

• • Your religious beliefs prevent the use of electronic communication

If you think you qualify, apply directly to HMRC, and continue complying with MTD until they confirm your exemption in writing.

Benefits of Going Digital

Complying with MTD isn’t just about avoiding penalties, (although that is a major element), it’s about running your business more efficiently:

• • Keep your records organised automatically

• • Reduce data entry errors

• • Access up-to-date financial insights

• • Save time at VAT filing deadlines

• • Stay HMRC compliant with less admin stress

Risks of Non-compliance

Failing to comply with MTD can lead to inability to file VAT returns, possible penalties or surcharges for late or incorrect filings, and increased administrative burden to correct mistakes.

Next Steps for Your Business

Here’s how to double-check that you’re compliant:

1. 1. Review your software:
      Make sure your accounting software is compatible with HMRC’s MTD requirements.

1. 1. Check your record-keeping:
      All VAT transactions must be recorded and stored digitally.

1. 1. Establish digital links:
      If you use multiple systems, ensure data flows electronically, with no need for manual re-entry.

1. 1. Talk to your accountant or agent:
      If you’re unsure whether your software and record-keeping processes meet MTD requirements, now is the time to review them.

1. 1. Apply for exemption (if relevant):
      You must continue to comply until HMRC confirms your exemption in writing.

How Can AMH Help You

At AMH, we make Making Tax Digital simple. A key quality that has always underpinned our service is that we embrace the latest technology and advancements in modern accounting. Our clients have been kept ahead of the curve with MTD compliant cloud accounting for many years.

We help small to medium UK businesses like yours set up and manage HMRC-approved, MTD compliant software that is tailored to your business and its needs.

We’ll create seamless digital workflows between your systems, manage VAT submissions directly through the MTD platform, and provide ongoing support to ensure your records remain compliant.

With AMH, you can focus on running your business, while we handle the complexities of MTD compliance. So, if you’d like to ensure all of your MTD obligations are being met as efficiently as possible, get in touch with AMH today.