What is the difference between Making Tax Digital for VAT and for Income Tax?

Making Tax Digital for VAT has covered every VAT-registered business since April 2022. Making Tax Digital for Income Tax started on 6 April 2026 for sole traders and landlords over £50,000. A VAT-registered sole trader can need both.

Both schemes share a name and an idea: keep your records in software and send HMRC the figures from it. But they cover different taxes, catch different people and send different things. This page sets them out side by side, from GOV.UK as checked on 16 October 2026.

The two side by side

What actually gets sent

A VAT Return tells HMRC how much VAT you charged and how much you paid to other businesses, and the money moves with it. VAT Notice 700/22 also has a strict digital links rule: once figures are in your records, moving them by copy and paste does not count.

An Income Tax quarterly update is different. It is a set of totals for each income and expense category, covering the tax year so far, and GOV.UK says HMRC does not receive individual receipts or invoices. It is a summary, not a tax return. The year ends with a tax return sent through the same software, and your tax is due by 31 January as before.

Doing both as a VAT-registered tradesperson

You must register for VAT if your taxable turnover over the last 12 months goes over £90,000. A sole trader with that much turnover in a tax year is over every MTD for Income Tax threshold. If your 2024-25 turnover was over £50,000, MTD for Income Tax already applies from 6 April 2026.

Some details link the two:

• Software. GOV.UK says that if you are VAT registered, you should check whether your VAT software also works with MTD for Income Tax, or that new software can meet your VAT needs.
• Matching quarters. A VAT quarter ending 30 June is usually due 1 calendar month and 7 days later, on 7 August, the same day as the first Income Tax update. If your VAT quarters end in June, September, December and March, choosing calendar update periods for Income Tax makes both sets end on the same days.
• Penalty points. Points for Income Tax are kept separately from points for VAT.
• Record detail. Below the £90,000 VAT threshold for a business, GOV.UK lets a sole trader record each item only as income or expense for Income Tax. Over it, records must be fully categorised.

Voluntary VAT and the Income Tax test

Some smaller traders register for VAT voluntarily. That can affect the Income Tax test. GOV.UK says that if you use the cash basis and are VAT registered, you can choose to include or exclude VAT in your business income, and if you include it, it counts towards qualifying income.

Take a decorator on the cash basis with £27,000 of work before VAT. At the standard rate of 20%, VAT adds £5,400, so takings including VAT are £32,400. If the income figure on the return includes VAT, qualifying income is £32,400, over the £30,000 line for April 2027. If it excludes VAT, it is £27,000.

What this means for you

Being in MTD for VAT does not put you in MTD for Income Tax, and being out of one does not keep you out of the other. Each has its own test, its own sign-up, its own deadlines and its own penalty points.

Steps if you are VAT registered

1. Check your self-employed and property turnover for 2024-25 and 2025-26 against £50,000 and £30,000.
2. Check how VAT is treated in your income figure if you use the cash basis.
3. Ask your VAT software provider whether it also handles MTD for Income Tax.
4. Sign up for MTD for Income Tax separately. Your VAT sign-up does not cover it.
5. Put both sets of deadlines in one diary, and use the free MTD check to confirm your start date. The trades section has more on running both.