Where MTD applies today
- MTD for VAT: every VAT-registered business, regardless of turnover
- MTD for ITSA: phased in from April 2026 for sole traders and landlords with combined gross income over £50,000; then £30,000 from April 2027
Digital records — what counts
You must store the following digitally:
- Business name, address and VAT registration number
- Each supply made and received: date, value, VAT rate
- Adjustments, the time of supply and the VAT account ("digital VAT account")
Photos of receipts are fine as long as the underlying data lives in MTD-compatible software.
Digital links — the trap
A "digital link" means data flows between software without manual re-keying. Acceptable:
- API connections (Xero ↔ HMRC)
- CSV imports
- Linked spreadsheet cells
Not acceptable: typing figures from one system into another.
What to do this quarter
- Confirm your software is on the HMRC approved list
- Switch on the HMRC connection inside your software
- Set up bank feeds so you stop manual entry
- Adopt a receipt-capture tool (Dext, Hubdoc, AutoEntry)
- Reconcile monthly, not quarterly
Not sure if you're MTD-ready? Book a 15-minute review.