How do I sign up for MTD with HMRC?

Worried about the new making tax digital (MTD) changes? Whether you run a VAT-registered business, are self-employed, or make extra money as a landlord, you might be wondering how you can sign up for MTD? 

First things first, don’t worry! It’s not as complicated as it might seem.

Remind me again, what’s MTD?

Let’s do a quick refresh on what making tax digital actually is. 

Essentially MTD is part of HMRC’s overall plan to fully ‘digitalise’ UK Tax. If you run a small business or work for yourself, you might already be used to using HMRC’s online service to complete Self Assessment or to pay VAT.

But with MTD, you’ll soon be – if not already – required to pay your tax and store all your records digitally. This means most sole traders and all VAT-registered businesses will no longer be able to use HMRC’s online service.

Instead, you’ll have to use a certain type of MTD-compatible software to file your taxes, as well as send regular updates to HMRC.

In April 2022, the first law around Making Tax Digital (MTD) came into effect in the UK for VAT-registered businesses. MTD for Income Tax is set to follow in April 2026. Here’s the timeline:

How do I know if I need to sign up for MTD?

You need to sign up for MTD if you’re:

• A VAT-registered business

• Self-employed or a landlord with an annual turnover or gross income of £30,000 and over

If you’re self-employed or a landlord earning over £50,000, MTD for Income Tax isn’t coming into effect until 2026, so you don’t actually have to sign up yet. Those earning between £30,000 and £50,000 will need to switch over to MTD by April 2027.

HMRC still needs to finalise what landlords, self-employed people and businesses (that aren’t VAT registered) earning under £30,000 will need to do in regard to MTD and when.

However, if you run a VAT-registered company, then you need to make sure you sign up for MTD if you haven’t done so already, otherwise, you could face penalties! Read on to see how you do this.

Registering online for MTD as a VAT-registered business

What you’ll need:

All VAT-registered businesses in the UK are now required to register for MTD. This is so you can file your VAT returns online through HMRC, but to do this, you need a special type of MTD-compliant software.

So before you do anything else, you need to make sure you have this compatible accounting software before you start your MTD registration. You can view the full approved list of software systems on HMRC’s website here.

As well as MTD-compatible software, make sure you also have the following handy before you start the process to sign up for MTD:

• Your Government Gateway user ID and password
• Your business VAT number
• Your company registration number

Signing up:

Once you have everything ready, go to HMRC’s website and follow the steps as prompted to register for MTD. Once you finish, you’ll be all set for making tax digital!

How do I sign up for Making Tax Digital if I’m self-employed?

What you’ll need:

Similar to VAT-registered businesses, sole traders and landlords will need to have MTD-compatible software before they can sign up for making tax digital. However, if you usually file your taxes through an agent (such as an accountant), they can sign you up for MTD with their own software.

Just ask them to send you an authorisation request link.

In addition to the compatible software, you’ll need the following ready:

• Your business name
• Your business start date or the date you started collecting property income
• An email address
• Your National Insurance number
• Accounting period
• Accounting type such as cash or standard accounting
• Your Government Gateway user ID & password

Signing up:

To sign up for MTD for Income Tax, you’ll have to do so through your chosen compatible software. If you already have software, you must contact your provider about signing up and they’ll be able to guide you using the above information you provide.

Get Making Tax Digital help with TaxScouts

If you’re confused by the upcoming MTD changes, and the type of software you need to use, then don’t worry. Get in touch with us for some simple, one-off tax advice from one of our accredited accountants. You can learn more here.