Making Tax Digital (MTD)
HMRC’s programme requiring VAT-registered businesses to keep digital records and submit VAT returns through MTD-compatible software, with extension to income tax (MTD ITSA) from 2026.
At a glance
Accounting- Why it matters
- UK statutory
- Related
- 3 terms
- Walkthroughs
- 3 guides
- Watch out
- Common misconception below
Plain English. UK spelling. No marketing filler.
Why this matters
If you are VAT-registered in the UK, you cannot submit a VAT return through the old HMRC portal. You must use software that connects to HMRC’s MTD API. From April 2026, sole traders and landlords with income over £50,000 also need MTD-compatible software for income tax — the rule extends down the income band in subsequent years.
How YionStack handles it
YionStack is MTD-compatible software in HMRC’s own list. The accounting module connects directly to HMRC over OAuth2; quarterly VAT returns are prepared from the live ledger, reviewed in the nine-box format, and submitted in one click. The HMRC submission reference attaches to the period record. There is no bridging software step. The full accounting ledger lives in YionStack; the API submission goes directly from that ledger. Bridging tools like 123Sheets or Comma exist to push from Excel into MTD — those are a workaround for businesses still on spreadsheets, not the destination.
Common misconception
MTD does not require new accounting software per se
It requires MTD-compatible software. If your existing accounting tool is on HMRC’s compatible list (Xero, QuickBooks, Sage, YionStack and others all are), you do not need to switch. If you keep books in a spreadsheet, you need either a bridging tool or a move to a full MTD package.
Walk me through it
The whole UK Business Operating System.
VAT, PAYE, Companies House, CIS, payroll, CRM and the AI that watches them — in one place built for UK businesses.