Making Tax Digital for VAT: who it applies to and how it works
If your business is VAT-registered, Making Tax Digital for VAT applies to it unless HMRC has agreed an exemption. You keep your VAT records digitally and submit your VAT Returns to HMRC using compatible software, rather than typing figures into HMRC's old online form. It applies to any business structure that is VAT-registered — sole trader, partnership, limited company or other — and it is a separate regime from Making Tax Digital for Income Tax.
Regulatory information about Making Tax Digital for VAT, sourced from HMRC. It is not a description of Quarter Day's launch scope — Quarter Day has not confirmed support for VAT Returns.
Who it applies to
All VAT-registered businesses. When the regime began in April 2019 it covered businesses above the VAT registration threshold; since April 2022 it has covered every VAT-registered business regardless of turnover, including those registered voluntarily. HMRC allows a small number of exemptions, which have to be applied for.
What digital records are required
Your VAT records must be kept in digital form in compatible software, including the business name, address and VAT registration number, any VAT accounting schemes used, and for each supply made or received the time of supply, the net value and the rate of VAT. Where information passes between pieces of software it has to travel through a digital link rather than being retyped.
| Stage | What happens |
|---|---|
| Ongoing | Keep the required VAT records digitally in compatible software |
| Each VAT period | Submit the VAT Return to HMRC through the software — usually quarterly, with the return and payment normally due one month and seven days after the period ends |
| If something changes | Keep records of adjustments and corrections digitally too |
How this differs from Making Tax Digital for Income Tax
Making Tax Digital for VAT is triggered by VAT registration and uses VAT Returns. Making Tax Digital for Income Tax is triggered by qualifying income from self-employment and property and uses quarterly updates plus a tax return. A VAT-registered sole trader can be within both regimes at once, with two different sets of submissions; a limited company can be within Making Tax Digital for VAT but not Making Tax Digital for Income Tax. See the Making Tax Digital for Income Tax guide for the other regime.
Frequently asked
My turnover is below the VAT threshold but I am VAT-registered. Does MTD for VAT apply?
Yes. Since April 2022 Making Tax Digital for VAT applies to all VAT-registered businesses regardless of turnover, unless HMRC has agreed an exemption.
Is a VAT Return the same as a quarterly update?
No. A VAT Return is the submission required under Making Tax Digital for VAT. A quarterly update is the submission required under Making Tax Digital for Income Tax. They are different submissions under different regimes, and a business can be within one, both or neither.
Can I be exempt from MTD for VAT?
HMRC allows exemptions in limited circumstances, for example where it is not reasonably practicable to use digital tools because of age, disability or location, on religious grounds, or where the business is subject to an insolvency procedure. You apply to HMRC; an exemption is not automatic.
Will Quarter Day support VAT Returns?
That has not been confirmed. Quarter Day is in development and will publish the business types, taxes and HMRC submissions it supports before subscriptions open. This guide describes HMRC's rules, not Quarter Day's launch scope.
Read HMRC's official guidance ↗
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While you're here, read how Quarter Day is planned to work or our Making Tax Digital guide.