What is Making Tax Digital?

Definition of Making Tax Digital

Making Tax Digital is a government initiative that sets out a bold vision for a digital tax system to "make it easier for individuals and businesses to get tax right and keep on top of their affairs".

The aim of the initiative is to make tax administration more effective, more efficient and easier for taxpayers, through the implementation of a fully digital tax system.

The changes outlined in the Making Tax Digital initiative will apply to a wide range of taxpayers, including most businesses, self-employed people and landlords, as well as individual taxpayers.

When will the changes happen?

Making Tax Digital has a phased rollout plan which started in early 2016. Its key milestones include:

  • April 2017 - Private pilot of rollout starts.
  • July-December 2017 - Digital tax accounts show taxpayers an overview of their liabilities in one place and HMRC begins a private pilot of Making Tax Digital for VAT.
  • Spring 2018 - Live pilot of Making Tax Digital for VAT begins.
  • April 2019 - Businesses with VATable sales above the VAT threshold are required to keep digital records and submit quarterly returns for VAT purposes only through their accounting software.
  • 2021 onwards - HMRC looks to widen the scope of Making Tax Digital.

More about Making Tax Digital

To stay up-to-date with the new initiative, take a look at our Making Tax Digital resources for small businesses and accountants.

More information about the Making Tax Digital initiative, along with a detailed breakdown of timescales and milestones, is available from gov.uk.

Got questions? Ask Emily!

FreeAgent's Chief Accountant Emily Coltman is available to answer your questions in the comments.

Bookkeeping and tax tips

We are committed to keeping your information safe. Read our Privacy Policy to find out more.

Are you an accountant or bookkeeper?

Find out more about FreeAgent for your practice.