03/08/2025
HMRC Deadlines for Making Tax Digital (MTD) from April 26, 2025
Making Tax Digital (MTD) is a key part of the UK government’s plan to modernize the tax system. It aims to simplify tax administration and reduce errors by encouraging businesses to keep digital records and submit their tax returns using compatible software.
Starting from April 26, 2025, new deadlines and requirements for MTD will be enforced, meaning that businesses of all sizes will need to comply with these digital reporting obligations. Here’s a breakdown of the deadlines and key points to keep in mind:
1. Expanded MTD Requirements
From April 26, 2025, MTD for VAT will extend to all VAT-registered businesses, regardless of their turnover. Previously, MTD was only mandatory for businesses with a taxable turnover above £85,000, but from this date, the requirement will apply to smaller businesses as well. This is part of the government’s long-term goal to digitalize tax reporting across the board.
2. Corporation Tax: A New Phase
Another significant shift will be the introduction of MTD for Corporation Tax. Businesses will need to start submitting Corporation Tax returns digitally through compatible software. The exact deadlines for this will be subject to the official rollout but are expected to align with the MTD VAT deadlines, likely in 2026. Businesses will be required to keep digital records of their Corporation Tax accounts and submit them in a way that’s compliant with the HMRC systems.
3. Record-Keeping & Software Requirements
Businesses must maintain their records digitally. This means using MTD-compliant software to keep track of income, expenses, and other key financial data. Many popular accounting software platforms, like QuickBooks, Xero, and Sage, have already integrated MTD capabilities, but businesses must ensure that their current software supports MTD filing ahead of the deadline.
4. Submission of Returns
Under MTD, businesses must submit VAT returns quarterly using digital tools. The deadline for filing a VAT return is currently 1 month and 7 days after the end of the VAT period. After the April 26 deadline, businesses that are part of the MTD program must ensure they submit their returns digitally within this timeframe to avoid penalties.
5. Penalties and Non-Compliance
Failure to comply with MTD requirements can result in financial penalties. HMRC is expected to introduce a points-based penalty system similar to the one used for late filing of VAT returns, but businesses should be proactive to avoid these costs. Starting from the April 2025 deadline, penalties for non-compliance with MTD will become stricter.
6. What's Next for MTD?
The government has also signalled that, after VAT and Corporation Tax, it will expand MTD to cover income tax and other taxes, possibly starting as early as 2027. Businesses should prepare for future changes by adopting digital record-keeping systems now.
Key Takeaways:
Deadline: April 26, 2025, will mark the date when all VAT-registered businesses must comply with Making Tax Digital.
Action Required: Ensure your business is using compatible software for VAT returns and Corporation Tax filing.
Penalties for Non-Compliance: Late or incorrect digital submissions may lead to penalties, so businesses must adhere to deadlines.
Long-Term Change: MTD will eventually cover other tax types, so businesses should prepare for a fully digital tax environment.
Staying on top of these deadlines is essential for avoiding fines and ensuring that your business remains compliant with the UK's growing digital tax system.
