QuickBooks HelpQuickBooksHelpIntuit

Making Tax Digital: Comparing Income Tax vs VAT

by Intuit•4• Updated 2 weeks ago

If you are already registered for VAT, you are likely a "VAT veteran" and familiar with the Making Tax Digital (MTD) process. However, Making Tax Digital for Income Tax (MTD for IT) introduces different rules, reporting rhythms, and HMRC requirements.

This article explains how the two differ and how you will manage both side-by-side in QuickBooks to stay fully compliant.

Note: This article covers digital record-keeping. For a broader overview of the HMRC mandate and how it affects your business, visit our Making Tax Digital hub page.

Two separate obligations

It is important to understand that Making Tax Digital for VAT and Making Tax Digital for Income Tax are separate obligations. Being compliant with one does not automatically mean you are compliant with the other.

Making Tax Digital for VATMaking Tax Digital for Income Tax (MTD for IT)
What is reported?VAT collected on behalf of HMRC and VAT incurred by the businessBusiness income and expenses
Submission typeVAT return and paymentQuarterly updates and an annual tax return with payment at the end of the tax year
FrequencyUsually quarterly, but can be monthly or annually Quarterly + one annual tax return
HMRC accountVAT accountPersonal tax account
ThresholdThe VAT threshold is ÂŁ90,000 on a rolling 12-month basis. You can choose to register voluntarily before reaching this limit. Once registered, all businesses must follow Making Tax Digital for VAT rules.Income Tax registration is required when you earn over ÂŁ1,000 in sole trader income.

The first phase of Making Tax Digital for Income Tax applies if you have qualifying income of over ÂŁ50,000 in 2024/25 tax year, with digital reporting beginning from April 2026.

Key differences

While both systems use a quarterly cycle, the specific requirements for Income Tax are more detailed:

  1. Different deadlines: VAT deadlines are typically based on your registration date and vary in frequency. MTD for IT updates follow fixed tax-year quarters (ending 5 Jul, 5 Oct, 5 Jan, and 5 Apr) unless you elect to use calendar quarters (30 June, 30 Sept, 31 Dec, 31 Mar).
  2. The final step: Unlike VAT, which typically ends after the fourth return, MTD for IT requires a Final Declaration. This replaces your annual Self Assessment and is where you account for non-business income like bank interest or tax reliefs like Gift Aid.
  3. Data detail: For VAT, you report 9 summary boxes of data. For Income Tax, you provide a summary of your business income and expenses broken down by category (e.g., professional fees, advertising costs).

How it works in QuickBooks

QuickBooks is designed to handle both workflows simultaneously.

  • VAT: Continue using the VAT app to prepare and submit your VAT returns as you do today.
  • Income Tax: Use the new Income Tax app to track your MTD for IT obligations and send your quarterly updates. (Open the Income Tax app in QuickBooks), or learn how to set up Making Tax Digital for Income Tax.
  • Shared data: One of the biggest benefits of QuickBooks is that your digital records (bank feeds and receipts) power both types of submissions automatically.

Things to know

  • Combined income: MTD for IT thresholds are based on your total qualifying income (e.g., Sole Trader income + Rental income). VAT is based only on your VATable turnover.
  • Digital links: Both systems strictly forbid manual typing or "copy and paste" from spreadsheets. Your data must flow digitally from the source to HMRC.
  • No change to payments: Making Tax Digital for Income Tax only changes how you report your figures. Your tax payment deadlines (e.g., 31 January and 31 July for Income Tax) remain exactly the same.

Ready for the next step?

If you are already managing VAT in QuickBooks, you have a head start. Now is the time to ensure your Income Tax records are just as organised. Transition from spreadsheets today to stay ahead of the MTD mandate. Explore plans and pricing


More help

QuickBooks Online EssentialsQuickBooks Online PlusQuickBooks Online Simple Start