Links to the legislation for Making Tax Digital.
MTD VAT legislation
The primary legislation for MTD VAT was enacted in section 62 of Finance (No 2) Act 2017. The primary legislation is largely enabling, allowing for regulations (secondary legislations) and notices (tertiary legislation).
The MTD VAT regulations (Value Added Tax (Amendment) Regulations 2018) were laid before parliament on 28 February 2018 and provided for MTD VAT to start for businesses over the VAT threshold from their first VAT period starting on or after 1 April 2019.
Further regulations, the Value Added Tax (Amendment) Regulations 2021, were laid on 7 September 2021 extending MTD VAT to all VAT registered businesses from their first VAT period starting on or after 1 April 2022.
The MTD VAT notice (VAT Notice 700/22: Making Tax Digital for VAT) was published on 13 July 2018 and completes the statutory framework for MTD VAT. Most of the necessary detail can be found in the notice.
MTD income tax self assessment legislation
The primary legislation for MTD income tax self assessment (MTD ITSA) was enacted in section 60, section 61 and schedule 14 of Finance (No 2) Act 2017. Some minor changes will be needed for subsequent policy changes. The primary legislation is largely enabling, allowing for regulations (secondary legislation) and notices (tertiary legislation).
A commencement order for MTD ITSA, The Finance (No. 2) Act 2017, Sections 60 and 61 and Schedule 14 (Digital Reporting and Record-Keeping) (Appointed Day) Regulations 2021, was signed on 23 September 2021. This order provided for a start date of 6 April 2024. The start date was amended to 6 April 2026 by The Finance (No. 2) Act 2017, Sections 60 and 61 and Schedule 14 (Digital Reporting and Record-Keeping) (Appointed Day) Regulations 2021 signed on 25 March 2024. The commencement order applies to both individuals and partnerships which means that partnerships are excluded by virtue of the lack of further regulations applying to them.
The MTD ITSA regulations, (The Income Tax (Digital Requirement) regulations and The Income and Corporation Taxes (Electronic Communications)(Amendment) Regulations) were laid on 23 September 2021. They were subsequently amended by The Income Tax (Digital Requirements) (Amendment) Regulations 2024 laid on 22 February 2024 to reflect the revised start date and other policy changes. The regulations provide much of the detail of the requirements, but some further details are in notices.
The Making Tax Digital for Income Tax: update notice which sets out the contents of quarterly updates was published on 22 February 2024. Further notices covering software and for joint property owners will be published at a later date.
HMRC published (on 14 March 2018) a commissioners’ direction which allows those testing MTD ITSA to use relevant software to deliver information equivalent to a personal return and self-assessment under sections 8 and 9, Taxes Management Act 1970. This direction provides the necessary certainty that completing the MTD ITSA end of year process satisfies the obligation to file a self assessment return.
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