All VAT registered businesses must now submit VAT returns under the new Making Tax Digital (MTD) service. What this means for you and your business really depends on your business's individual circumstances.
Click on the link most relevant to your current situation for more information:
Every business that falls under the new Making Tax Digital (MTD) regime must keep digital records in order to comply with the requirements of MTD. This can be in the form of a spreadsheet, digital cashbook or bookkeeping software. It should include:
HMRC have confirmed that spreadsheets are an acceptable way of maintaining records and our VAT Filer software includes a quick and easy import routine to get your data from your spreadsheet into the program so that you can complete your VAT return. This is known as 'bridging' and ensures that you are complying with the digital link requirements of Making Tax Digital.
If you are already maintaining spreadsheet records, you’re already on your way to meeting the obligations that Making Tax Digital (MTD) requires.
The records you maintain must include:
How do I sign up and start using HMRC’s MTD Service?
If you’re using a basic spreadsheet to record your transactions, it’s unlikely that this will provide you with the ability to file your VAT return via the MTD service. TaxCalc’s VAT Filer for Business software includes a quick and easy import routine to get your data from your spreadsheet into the program so that you can produce your VAT return. This is known as ‘bridging’ and ensures that you’re complying with the requirements of Making Tax Digital.
Once you’ve decided which system you intend to use, you then need to make sure that your business has signed up for MTD.
If you’re already using bookkeeping software, it’s likely that this will be MTD compliant, so you should talk to your software provider regarding submission of VAT returns using the MTD service.
My business is VAT registered and I have an accountant
If you already use an accountant or agent to complete your VAT return, we suggest talking to them regarding the requirements of Making Tax Digital.
The key requirement for all businesses falling within the MTD for Income Tax regime will be to keep records digitally, make quarterly submissions and complete an annual tax declaration.
HMRC's current MTD timeline requires all self-employed individuals and property landlords with turnover exceeding £50,000 to join MTD for Income Tax with effect from 6 April 2026.
How does it work?
As with MTD for VAT, one of the main requirements of MTD for Income Tax is the necessity to keep a digital record of income and expenses. This can still be via a spreadsheet, as long as the data is imported digitally into the software used to send a summary of income and expenses to HMRC.
A summary of income and expenses must be sent to HMRC every three months. Using the information that has been sent, HMRC can then provide an estimate of the tax liability. A final report needs to be sent to HMRC, which confirms the income and expenses of the accounting year. At this point, a claim for allowances and reliefs can also be made and a final tax calculation obtained.
Although there is an obligation to send income and expense information every 3 months, it is possible to send an update to HMRC more often, for example, if a more up-to-date tax estimate is required.
What is TaxCalc doing to support businesses?
We are actively working on new solutions, as recognised by HMRC, as well as evolving our existing ones to make the transition into MTD for Income Tax as seamless as possible. MTD Quarterly Filer is our new MTD for Income Tax bridging solution and allows our customers to submit quarterly submissions to HMRC. Those familiar with VAT Filer, our MTD for VAT bridging solution, will recognise the simplicity with which those submissions can be made.
Although MTD Quarterly Filer can ingest data from any spreadsheet, we have produced our own templates for recording transactions and summarising totals as a starting point for anyone that needs them. The totals can then be imported using VAT Filer (for quarterly MTD for VAT submissions) and using MTD Quarterly Filer (for quarterly MTD for Income Tax submissions).
If you would like to download these sample spreadsheets then we have these available for free on our Knowledgebase site.
If you fall within the MTD for Income Tax regime, you will no longer be required to complete the same Self Assessment tax return that you do today. However, you will still be required to submit information annually in order to finalise your tax position and the capability to do that will be included in future versions of TaxCalc.
Main VAT Home Screen
The VAT Filer module allows you to complete and submit VAT returns for your VAT registered business. Assuming you have a licence, click on the Open VAT Filer button to open the module in a new tab.
The Business screen allows you to create your business record to contain all of your returns.
Making a new business
Click on the New Business button to add your first business.
The New Business Profile window will open. If it’s your own self-employment or property business then choose Individual trade/property. If it’s a partnership or a limited company then choose one of these options.
The business will need a name to keep things clear and if it’s not a partnership or limited company, you should identify the business owner by entering their name. If you have more than one business, this will help to keep your data organised in the future.
After creating your business, you can create a VAT return for it. This article assumes that you have enrolled the business in MTD and will take you through the process of ‘fetching’ a VAT period from HMRC. Please note that, under the MTD service, you cannot add your own VAT periods to TaxCalc or any other software. These have to be retrieved from HMRC’s system.
(If you haven't yet registered for MTD, the video above shows you how to create a VAT period).
Click on the Open VAT Returns button. This will take you to the screen which will display all VAT returns completed or retrieved from HMRC.
Click on the Fetch VAT Periods button. Anything involving MTD requires you to authorise TaxCalc to work with the HMRC systems. You should only need to authorise TaxCalc for your business every 18 months, or if new functionality becomes available that you want to use. If you need to authorise TaxCalc you’ll see a window asking you to do so for MTD VAT. Click on the Authorise button to continue. The next screen takes you through HMRCs authorisation process. Click Continue and you’ll need to log in using your HMRC government gateway credentials (a user id with 12 digits and a corresponding password).
Once logged in you just need to confirm that you’re granting your copy of TaxCalc permission to view and submit your returns when you ask it to. In case you’re concerned, this is only for your copy of TaxCalc on the machine that you installed it on. Click on Grant Authority to confirm. That’s TaxCalc authorised!
Now click on the Fetch button to keep going. You need to enter the dates that you want to fetch VAT periods for; we would recommend that these are the dates of your VAT Return period but they can also be a period of your choosing.
Once you have entered the dates, click on Search. The VAT period available should be shown. Click on Fetch and the VAT return will be created, ready for you to complete.
Click Open once you have selected the correct VAT period and you can start completing your VAT return.
One of VAT Filer’s features is the ability to import data from a spreadsheet.
Once your VAT Return has been created, go to the Source VAT data menu. This is where the accounts data that will make up your VAT Return can be entered. To import this directly click on the Import Source Data button and the import data screen will be displayed.
The first thing you will be asked to do is select the spreadsheet file where your VAT data can be found. Click on the Browse button and your computer’s files and folders will be displayed. Once you have found the file, highlight and click Open to make your choice.
You will then need to create an import map so the mappings can be saved. The first time the import is used, this will be entered for you but you can enter a name of your choosing and a description, if you wish. Click Continue to move to the mapping screen.
Mappings can be created in two ways; by clicking on the box number and choosing the cell that contains the VAT data or by clicking the right hand button over the cell you need and selecting the correct box of the VAT Return.
You can double check the mapping of any box by clicking ‘Go to cell’. This will highlight the mapped box. If you need a reminder of what each of the boxes relate to on a VAT Return, this can be easily done by clicking the ‘I’ next to each box.
Once you have made your selections, click Continue to view a summary of the data that will be imported. At this point, you can choose whether to save a copy of the imported spreadsheet against your VAT Return, especially handy if you want to revisit the spreadsheet at any time.
Click Finish and you will be taken back to the Source VAT data screen where your imported source data can be viewed.
Sometimes it’s necessary to make adjustments to the source data that is used to prepare your VAT Return and this can be easily done using VAT Filer.
Once your VAT Return has been created and your source data has been entered, go to the Adjustments menu, found under the VAT Return menu on the left hand side of your screen. Click on Add and a list of adjustments that can be made will be listed. This list is not exhaustive and if a specific adjustment is not listed you can use type ‘Other’ which allows you to create your own specific adjustment.
Click Add Record to create a record and then add your own description, the type of adjustment and which boxes should be adjusted. The record will be automatically saved and any detail can then be amended by selecting the relevant box.
To create another adjustment, click on the ‘Create another’ button at the bottom of the screen and the list of possible adjustments will again be displayed. Click Add record and enter the required details.
Each type of adjustment added will create a page within the left hand Adjustments menu. A summary of all the adjustments entered is also displayed on the main Adjustments menu screen for easy reference.
Once all of your adjustments have been added, select the Adjusted VAT data option. This provides an easy review of your original source data, the adjustments that have been added and the adjusted VAT figures that will make up your VAT Return.
Sometimes it’s necessary to make adjustments to the source data that is used to prepare your VAT Return and this can be easily done using VAT Filer.
Once your VAT Return has been created and your source data has been entered, go to the Adjustments menu, found under the VAT Return menu on the left hand side of your screen. Click on Add and a list of adjustments that can be made will be listed. This list is not exhaustive and if a specific adjustment is not listed you can use type ‘Other’ which allows you to create your own specific adjustment.
Click Add Record to create a record and then add your own description, the type of adjustment and which boxes should be adjusted. The record will be automatically saved and any detail can then be amended by selecting the relevant box.
To create another adjustment, click on the ‘Create another’ button at the bottom of the screen and the list of possible adjustments will again be displayed. Click Add record and enter the required details.
Each type of adjustment added will create a page within the left hand Adjustments menu. A summary of all the adjustments entered is also displayed on the main Adjustments menu screen for easy reference.
Once all of your adjustments have been added, select the Adjusted VAT data option. This provides an easy review of your original source data, the adjustments that have been added and the adjusted VAT figures that will make up your VAT Return.
Once you have processed your VAT return and are happy that the information is complete, it can be sent directly to HMRC using the MTD service. Select Check and Finish from the left hand menu and File to HMRC. Assuming that authorisation for TaxCalc to interact with HMRC is still in place, a summary of the information to be submitted to HMRC will be displayed. You need to tick the box on screen to confirm that this data is accurate to the best of your knowledge and then click Continue. Click File Online to send the Return.
A response will be returned from HMRC and a history of the online filing for this VAT Return recorded for your reference.
If, for some reason, the authorisation for TaxCalc to interact with HMRC is not in place, at the point where you click File Online, you’ll see a window asking you to authorise TaxCalc to connect to HMRC for MTD VAT purposes. Click on the Authorise button to continue. The next screen takes you through HMRCs authorisation process. Click Continue and you’ll need to log in using your HMRC government gateway credentials (a user id with 12 digits and a corresponding password).
Once logged in you just need to confirm that you’re granting your copy of TaxCalc permission to view and submit your returns when you ask it to. In case you’re concerned, this is only for your copy of TaxCalc on the machine that you installed it on. Click on Grant Authority to confirm. That’s TaxCalc authorised!