Making Tax Digital (MTD) is changing how individuals and businesses manage their taxes in the UK. Whether you are a small business owner, landlord, or self-employed professional, MTD rules mean you must keep digital records and submit tax information online—using HMRC-approved software. One of the most reliable and user-friendly options is QuickBooks.
In this blog, we will explain how QuickBooks helps you stay compliant with MTD for VAT and the upcoming MTD for Income Tax. We will break down what MTD means, who it affects, and how to use QuickBooks to meet your obligations without stress. If you want to save time, avoid penalties, and stay organised, this blog is for you.
Here’s what we cover:
What is Making Tax Digital (MTD)?
Making Tax Digital, or MTD, is a UK government initiative introduced by HMRC. It’s meant to make tax reporting less confusing, more accurate, and easier for self-employed people and businesses to handle. Instead of submitting a single tax return once a year, MTD requires taxpayers to keep digital records and send updates to HMRC throughout the year.
MTD was introduced in phases:
- April 2019 – MTD for VAT-registered businesses above the VAT threshold.
- April 2022 – All VAT-registered businesses, regardless of income, must comply.
- April 2026 – MTD for Income Tax (MTD ITSA) will apply to self-employed individuals and landlords earning over £50,000 annually.
This digital approach to tax applies to most small businesses, landlords, and self-employed professionals. Paper records and manual spreadsheets are no longer enough.
To meet MTD requirements, you must use MTD-compatible software that connects directly to HMRC.
Who Needs to Follow MTD Rules?
You must comply with MTD if you are:
- A VAT-registered business (regardless of turnover)
- A landlord or self-employed individual earning more than £50,000 (from April 2026)
- An accountant or bookkeeper managing client records
Even if you use an accountant, it is still your responsibility to make sure you are using approved software and submitting updates on time.
MTD for VAT: What You Need to Know
Under MTD for VAT, all VAT-registered businesses must:
- Keep digital records of their VAT transactions
- Use software to prepare and send VAT returns
- Submit returns every quarter (every 3 months)
What are digital records?
You need to keep a digital copy of:
- Business name and contact details
- VAT number
- Invoices issued and received
- VAT rate charged
- Total VAT due or reclaimable
QuickBooks allows you to store all these records in one place, making VAT returns faster and more accurate.
MTD for Income Tax (ITSA): Coming in April 2026
The next big change is MTD for Income Tax, also called MTD ITSA. From April 2026, self-employed individuals and landlords earning over £50,000 annually must:
- Keep digital records of all income and expenses
- Submit quarterly updates to HMRC
- File an End of Period Statement (EOPS)
- Submit a Final Declaration each tax year
This will eventually replace the current Self Assessment tax return system for many taxpayers.
Who will it affect?
- Sole traders
- Freelancers
- Landlords (with property income)
More groups will be included in the future, including those earning over £30,000. It is important to start preparing now.
Why Use QuickBooks for MTD Compliance?
QuickBooks is HMRC-recognised and designed to help you meet MTD rules without stress. Here is why it is a popular choice for small business owners and accountants in the UK.
Key features:
- MTD-compliant software: Connects directly to HMRC
- Automated VAT returns: Reduce errors and save time
- Real-time tracking of income and expenses
- Mobile access: Update your records from anywhere
- Secure cloud storage: Your data is backed up and protected
- Custom reports: Easy access to profit & loss, balance sheets, and more
QuickBooks works well for:
- VAT-registered businesses
- Sole traders and freelancers
- Landlords with property income
- Accounting firms managing multiple clients
Visit the official QuickBooks MTD homepage to get started.
How to Use QuickBooks for MTD: Step-by-Step
1. Sign up for QuickBooks Online
Choose a subscription plan that suits your needs. If you are unsure, start with the Simple Start or Essentials plan.
2. Register for MTD with HMRC
You must sign up for MTD before submitting any returns. Visit the HMRC MTD registration page.
3. Connect QuickBooks to HMRC
Once signed up, link your QuickBooks account to HMRC. The system will ask for your Government Gateway ID and VAT number.
4. Enable MTD features in QuickBooks
Go to Taxes > VAT > Set up MTD, then follow the instructions to enable digital VAT submissions.
5. Start keeping digital records
QuickBooks makes it easy to:
- Enter your expenses and business income
- Capture receipts using the mobile app
- Generate VAT reports in real time
6. Submit returns
After reviewing your data, click Submit to HMRC. You will receive confirmation once your return has been accepted.
MTD Compliance Tips for Small Businesses and Accountants
Here are some simple ways to stay on track with MTD:
- Keep your records updated weekly
- Use bank feeds to sync income and expenses
- Set reminders for quarterly submission dates
- Share your QuickBooks account with your accountant
- Check for errors or missing entries regularly
Keeping on top of your books throughout the year makes tax time much easier.
Manual vs. QuickBooks MTD
How to Prepare for MTD ITSA in 2026
It may seem far away, but preparing for MTD for Income Tax now can save you time and money later. Here is how to get ready:
- Review your earnings to see if you will be affected
- Switch to digital software now, not later
- Keep all records in one place
- Attend free webinars or training from accounting platforms
- Learn basic bookkeeping if you are new to it
Want to become confident with accounting? Check our ACCA and bookkeeping training courses.
Upgrade
Your Accounting Skills
Our Xero & QuickBooks courses are perfect for beginners, ambitious students, small business owners, bookkeepers, accountants, and career changers. Learn practical bookkeeping and cloud accounting skills that help you become job-ready and confident in the digital accounting world.
Common Questions about MTD and QuickBooks
Do I still need an accountant?
Yes, even with QuickBooks, an accountant can help you avoid mistakes and stay tax-efficient.
Is QuickBooks free?
No, but it offers a free trial. Monthly plans are available and often discounted.
What if I miss a submission?
HMRC may issue penalties for late submissions or incorrect returns. Staying organised is key.
Final Thoughts
Making Tax Digital is here to stay. Whether you run a small business, rent out property, or freelance part-time, using approved software is now a legal requirement.
QuickBooks is one of the easiest tools available for MTD compliance. It keeps your business records accurate, saves time on tax submissions, and helps you stay organised all year.
Ready to Take Control of Your Accounting?
Understanding MTD rules and using the right software is only one part of the picture. To stay ahead in your career or manage your business better, it helps to have professional training.
Enrol in our online bookkeeping and accounting courses today. Learn how to use QuickBooks, prepare for MTD, and become confident with UK tax rules. Start now and be MTD-ready before the deadline.
