How to sign up for Making Tax Digital

If you keep hearing about new digital tax rules but don’t know where to start, you’re not alone. HMRC now brings more people into digital record-keeping, and signing up is the first step.

This guide explains what you need to prepare and what to expect once you’ve signed up for MTD. 

Key takeaways

• You need to apply for MTD if your business or property income meets HMRC’s income threshold

• You need a Government Gateway ID and compatible software before you can sign up

• Signing up is simple – log in, confirm your details and link your compatible software to HMRC

Who needs to sign up for MTD?

You need to sign up for Making Tax Digital (MTD) if you’re:

• Self-employed

• A landlord and,

• Meet HMRC’s qualifying income thresholds.

Here’s when this applies:

You also need to sign up and follow MTD rules for submitting VAT returns if you run a VAT-registered business, regardless of turnover.

💡 Editor insight: 2 in 5 SMEs unprepared for Making Tax Digital as first filing deadline approaches

How to sign up: a checklist

Make sure you have everything HMRC needs before you start the sign-up process for MTD. This handy checklist should help you work out what you need:

Your HMRC Government Gateway ID: You need a Government Gateway user ID and password to access your tax account. If you don’t have one, you can create it on the HMRC website.

Compatible MTD software: MTD relies on accounting software to store your records and send updates to HMRC. Choose software that appears on HMRC’s list of approved MTD products and fits your business needs.

If you want to continue using a spreadsheet to track your income and expenses, you can. You just need to link your spreadsheet to HMRC through bridging software. This software takes the figures from your spreadsheet and sends them to HMRC in the correct MTD format, so you meet the rules without changing how you record day to day.

Key business or personal details: Have your personal and business information ready, including:

• National Insurance number

• Business name

• Business address

• Your Unique Taxpayer Reference (UTR)

• Any VAT information if you also use MTD for VAT

How to sign up for MTD

Once you’ve got everything ready, you can sign up for MTD through your HMRC online account. Follow these five simple steps to sign up:

1. Log in to your Government Gateway account

Use your Government Gateway user ID and password to access your self-assessment account.

2. Confirm your business or property income

HMRC checks your eligibility based on your total business and property income for the relevant tax year. Make sure your records match the figures you report.

3. Enter the details HMRC requests

Provide your National Insurance number, UTR, business information and contact details. HMRC uses this to link your account to MTD.

4. Add your MTD-compatible software

Once HMRC confirms your sign-up, activate MTD in your chosen software. This links your software to your HMRC account so it can send updates directly.

5. Keep digital records and submit them through your software

After activation, you need to digitally record your income and expenses. Your chosen software submits your records to HMRC directly, replacing the manual process of entering information into HMRC’s online forms.

I’ve signed up, now what?

Once you sign up for MTD, you need to keep all your business or property records in your chosen software. You must submit quarterly updates directly through your software, in line with the dates HMRC has set:

• 7 August – For the period 6 April to 5 July

• 7 November – For the period 6 April to 5 October

• 7 February – For the period 6 April to 5 January

• 7 May – For the period 6 April to 5 April

Your software prepares each update using the records you enter during the relevant period.

At the end of the tax year, you also need to send your final declaration to finalise your figures for the year.

You then pay your self assessment bill by 31 January as usual, with your second payment on account due by 31 July, if applicable.

Common issues

You may run into a few problems when signing up, so it helps to know some of the common issues in order to avoid them:

• Wrong Government Gateway login – Using an ID not linked to your self-assessment account may block the sign-up process

• Software not connecting – MTD may not activate if you miss the link inside your software or use the wrong login details

• Out-of-date HMRC records – Old addresses or business details may prevent HMRC from verifying your information

• Income thresholds not matching – HMRC checks your eligibility against its own figures, so mismatched totals can confuse things

• VAT and income tax not linked separately – Each MTD service needs separate activation in your software

Signing up for MTD for VAT

If you run a VAT-registered business, you should already be following the MTD for VAT rules. This means keeping digital VAT records and submitting VAT returns through MTD-compatible software.

You can sign up through your VAT online account, then activate MTD in your software. For full steps, see HMRC’s guidance here.