Making Tax Digital for VAT

Current position: 1 September 2026. MTD for VAT applies to VAT-registered businesses regardless of whether taxable turnover is above or below the VAT registration threshold, unless HMRC accepts an exemption.

Who must follow the rules

All VAT-registered businesses should now be signed up for MTD for VAT. HMRC automatically signs up new VAT-registered businesses unless they are exempt or have applied for exemption. The staged £50,000, £30,000 and £20,000 MTD for Income Tax thresholds do not decide whether MTD for VAT applies.

Digital records and digital links

The electronic account must include specified business details and the VAT data required by the rules. For supplies, this includes the tax point, net value and VAT rate, subject to the detailed rules and permitted summary treatments in VAT Notice 700/22.

• Keep the required VAT records in functional compatible software.
• If several products form the electronic account, transfer data between them using digital links.
• Do not manually copy and paste information that continues to form part of the electronic account.
• Keep original invoices and other records where VAT or other tax law still requires them; not every supporting document has to be digital.

Software and filing

Compatible software must keep and maintain the required records, prepare the VAT Return from those records and communicate with HMRC through its API. A compatible package can do all three, or bridging software can connect records such as spreadsheets to HMRC.

MTD changes how records and returns are handled; it does not create a new universal VAT Return due date. Continue to use the deadline shown in the VAT online account and follow the VAT period and payment rules that apply to the business.

Use HMRC’s VAT software finder. UK Tax Hero does not rank VAT products.

Exemptions and record retention

HMRC may accept an exemption where it is not practical to use digital tools because of factors such as age, disability or location; where the business is subject to an insolvency procedure; or where the business is run entirely by practising members of a religious society whose beliefs are incompatible with electronic communications or records. Use HMRC’s application route rather than deciding the exemption yourself.

VAT records normally need to be kept for at least six years. GOV.UK states a ten-year period for the VAT One Stop Shop or former Mini One Stop Shop records. Other special rules can change what must be retained.