What is Making Tax Digital (MTD)?

Chris Horroll
Chris Horroll
  • Updated


From April 2020 most VAT registered businesses with a turnover above £85,000 must keep their VAT records digitally and use Making Tax Digital compatible software to submit their VAT returns.

Making Tax Digital is an initiative to make it easier for individuals and businesses to get their tax right and to keep on top of their accounting practices.  

HMRC's ambition is to become one of the most digitally advanced tax administrations in the world. 

Making Tax Digital is making fundamental changes to the way the tax system works - transforming tax administration so that it is: 

  • more effective 
  • more efficient
  • easier for taxpayers to get their tax right  

This article includes: 

What is MTD compatible software?

Functional compatible software is a software program, or set of software programs, products or applications, that must be able to: 

  • Record and preserve digital records 
  • Provide to HMRC information and returns from data held in those digital records by using the API platform
  • Receive information from HMRC via the API platform 

Is my Alto software MTD compatible?

Alto does not hold all the information for filling in a VAT return so it cannot be HMRC making tax digital compatible on its own.  

Alto does record and save digital records so when used alongside other programs, it is still a component of HMRC compatible software.  

To find out which accounting software is compatible and can link to the HMRC API, visit https://www.gov.uk/guidance/software-for-sending-income-tax-updates.

Are any changes being made to Alto for MTD?

Where Alto is used as a part of HMRC compliant accounting procedures, there needs to be a digital transfer between Alto and the accounting software that will be in communication with HMRC via the API. 

Alto holds transactional details that need to be included in the transfer summary of information that allows your business to compile your VAT return.  

Related articles: 

Making Tax Digital - User Guide

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