Making Tax Digital logo

Overview of Making Tax Digital (MTD) Software Providers

Making Tax Digital (MTD) is a transformative initiative from HMRC that requires businesses to maintain digital records and submit VAT returns using MTD-compatible software. Understanding this landscape of MTD software providers can streamline your tax management, ensure compliance, and support your business’s financial health.

Understanding Making Tax Digital (MTD)

Making Tax Digital (MTD) represents a fundamental shift in HMRC’s approach to taxation to make tax administration more effective, efficient, and straightforward for taxpayers. It mandates that businesses use compatible software to keep digital records and submit VAT returns. HMRC’s MTD initiative is especially significant for VAT-registered businesses with a taxable turnover above the VAT threshold.

Who Needs MTD-Compatible Software?

Any VAT-registered business with a turnover above the VAT threshold needs MTD-compatible software to keep records digitally and submit VAT returns to HMRC. From 2026, the MTD for Income Tax Self Assessment (ITSA) initiative will also extend these requirements to self-employed individuals and landlords.

Navigating the Landscape of MTD Software Providers

With the introduction of Making Tax Digital, an array of MTD-compatible software providers has emerged. Ranging from accounting systems to standalone VAT software, these software products are available to meet the varied needs of businesses. The choice of MTD software will depend on factors like the nature of your business, the complexity of your tax affairs, and your existing accounting systems.

Why Consider Bridging Software for MTD?

Bridging software is a digital link between a business’s accounting records and HMRC’s systems, allowing for the seamless transmission of VAT return information. These software products are handy for businesses that prefer to keep their spreadsheet-based record-keeping practices while ensuring MTD compliance.

The Role of APIs in MTD-Compatible Software

MTD-compatible software communicates with HMRC systems through an API, facilitating the secure and direct submission of VAT returns. Software developers have incorporated this feature into their products, making it a standard offering in MTD software.

Choosing Cloud Accounting Software for MTD Compliance

Cloud accounting software offers the dual benefits of digital record-keeping and anytime, anywhere access. It not only facilitates MTD compliance but also improves the efficiency of financial management. As the business landscape becomes more digital, cloud accounting solutions are becoming popular for businesses of all sizes.

Key Takeaways:

  • MTD requires businesses to keep records digitally and submit VAT returns electronically.
  • MTD-compatible software is mandatory for VAT-registered businesses with a turnover above the VAT threshold.
  • There are a wide range of MTD software providers to choose from.
  • Bridging software can be a beneficial solution for businesses with spreadsheet-based accounting practices.
  • API integration in MTD software enables the direct submission of VAT returns to HMRC.
  • Cloud accounting software offers a versatile solution for MTD compliance and efficient financial management.
A person doing their taxes on a touch screen device.
Female accountant analyzing financial documents and writing at her desk with a screen in front of her.

Request a call back

Let us know when you would like us to call you back by filling in this form:
Call back form

Our 5 Star Reviews

Sofia Carlini
Sofia Carlini
Read More
The Jack Ross Team has been an absolute delight. Professional, nice and fast during the Audit procedure. Thank you Jack Ross Team.
Katrien Vanassche
Katrien Vanassche
Read More
Very good service from the Jack Ross Team. They gave us good advice and completed a very efficient audit. They have a friendly and competent team. I would surely recommend them.
aj shelton
aj shelton
Read More
Jack Ross is based in Manchester and provides tax planning and Xero accounts. They are a long-standing and well-regarded firm with an excellent reputation. They provide their clients with exceptional service and a wealth of advice. I have no hesitation in using their professional services.

HMRC's Videos on Making Tax Digital

Latest News

Scroll to Top