Key facts
- MTD stands for Making Tax Digital — HMRC’s programme to digitise the UK tax system.
- ITSA stands for Income Tax Self Assessment — the income tax regime for self-employed and landlords.
- EOPS stands for End of Period Statement — now merged into the “final declaration”.
- An API is an Application Programming Interface — the secure connection between your software and HMRC.
- A digital link is an automated transfer of data between software systems, with no manual re-keying.
MTD Glossary: A–Z
Below is a plain-English guide to the most common terms, acronyms, and jargon you will encounter when dealing with Making Tax Digital.[1]
| Term | Definition |
|---|---|
| API | Application Programming Interface. The secure technology that allows MTD-compatible software to communicate with HMRC’s systems. When you submit a VAT return or quarterly update, your software sends the data via HMRC’s MTD APIs. |
| Bridging software | A lightweight application that connects existing records (e.g. a spreadsheet) to HMRC’s MTD systems. It reads data from your records and submits it to HMRC, satisfying the MTD filing requirement without replacing your existing record-keeping system. |
| Calendar quarters | An alternative to standard tax-year quarters for MTD ITSA. Calendar quarters run 1 Apr–30 Jun, 1 Jul–30 Sep, 1 Oct–31 Dec, 1 Jan–31 Mar. You can elect to use them if they suit your business better. |
| Compatible software | Software recognised by HMRC as meeting the requirements for Making Tax Digital. It must be able to maintain digital records and submit data to HMRC via the MTD APIs. HMRC publishes lists of compatible software on GOV.UK.[1] |
| Cumulative update | A quarterly update that includes year-to-date totals rather than just the figures for the individual quarter. Some MTD software submits updates on a cumulative basis. |
| Digital exclusion | An exemption from MTD for people who cannot use digital tools. Grounds include age, disability, remoteness (no internet access), and religious objections. You must apply to HMRC for this exemption. |
| Digital link | An electronic or automated transfer of data between software programs. Under MTD, all data transfers must be via digital links — no manual re-keying or copy-and-paste between applications. See Digital Links & Digital Records.[3] |
| Digital records | Electronic records of your business transactions (dates, amounts, categories) maintained in software or a digitally-linked spreadsheet. Not the same as scanned paper receipts. See Digital Links & Digital Records. |
| End of Period Statement (EOPS) | An earlier term for the year-end business income confirmation under MTD ITSA. Now merged into the final declaration. See The Final Declaration. |
| Final declaration | The year-end submission under MTD for Income Tax that replaces the traditional Self Assessment tax return (SA100). You confirm your quarterly figures, report other income, claim reliefs, and finalise your tax. Due by 31 January following the tax year. See The Final Declaration.[2] |
| Flat Rate Scheme (FRS) | A simplified VAT scheme where you pay a fixed percentage of your gross turnover as VAT. Compatible with MTD for VAT. See Flat Rate Scheme. |
| Functional compatible software | HMRC’s official term for software (or a combination of software products connected by digital links) that meets all the MTD requirements: digital record-keeping and digital filing to HMRC. |
| Government Gateway | HMRC’s online authentication system. You sign in via the Government Gateway to authorise your MTD software to access your tax account. |
| HMRC | HM Revenue & Customs. The UK government department responsible for collecting taxes, administering MTD, and enforcing compliance. |
| ITSA | Income Tax Self Assessment. The tax regime for self-employed individuals and landlords. “MTD for ITSA” is the MTD requirement applied to this group. See MTD for Income Tax (ITSA).[2] |
| Mandate / mandate date | The date from which MTD becomes compulsory for a particular group of taxpayers. For example, the MTD ITSA mandate date for those with income over £50,000 is 6 April 2026. |
| MTD | Making Tax Digital. HMRC’s programme to modernise the UK tax system by requiring digital records and software-based filing. See What Is Making Tax Digital?[1] |
| Obligation | In MTD terminology, an obligation is a filing requirement — a quarterly update or final declaration that HMRC expects you to submit by a certain date. Your software retrieves your obligations from HMRC. |
| Penalty points | Under HMRC’s points-based penalty system, you receive one point for each late submission. Once you reach the threshold (4 points for quarterly obligations), a £200 penalty is charged for each subsequent late filing. |
| Pilot | A voluntary testing programme run by HMRC before a full MTD mandate. The MTD ITSA pilot has been running since 2018, allowing eligible taxpayers to try the system before it becomes compulsory. |
| Qualifying income | Your gross income from self-employment and/or property, before deducting expenses, losses, or capital allowances. This determines whether you meet the MTD ITSA threshold (£50,000 from April 2026, £30,000 from April 2027).[2] |
| Quarterly update | A summary of business income and expenses for a three-month period, submitted to HMRC through MTD software. Four quarterly updates are required per tax year under MTD ITSA. See Quarterly Updates Explained. |
| SA100 | The traditional Self Assessment tax return form. Under MTD for ITSA, the SA100 is replaced by the final declaration submitted through MTD software. |
| Soft-landing period | A transitional period during which HMRC takes a lenient approach to certain MTD requirements. The soft-landing for digital links under MTD for VAT ran from April 2019 to March 2020. |
| Standard quarters | The default quarterly periods for MTD ITSA, aligned with the tax year: 6 Apr–5 Jul, 6 Jul–5 Oct, 6 Oct–5 Jan, 6 Jan–5 Apr. |
| Tax gap | The difference between the tax theoretically owed and the tax actually collected. Reducing the tax gap is one of HMRC’s primary goals for MTD. |
| VAT Notice 700/22 | HMRC’s official guidance document for Making Tax Digital for VAT. It sets out the detailed requirements for digital records, digital links, and software.[3] |
Frequently Asked Questions
What does MTD stand for?
MTD stands for Making Tax Digital. It is HMRC’s programme to modernise the UK tax system by requiring digital record-keeping and filing.
What does ITSA mean?
ITSA stands for Income Tax Self Assessment. “MTD for ITSA” refers to Making Tax Digital for Income Tax Self Assessment — the new requirement for self-employed people and landlords to file quarterly digital updates.
What is the difference between EOPS and the final declaration?
They are essentially the same concept. HMRC originally called the year-end submission an “End of Period Statement” (EOPS). The process has been renamed to “final declaration” to better describe its purpose: confirming your income and finalising your tax liability for the year.
What is an API in the context of MTD?
An API (Application Programming Interface) is the technology that allows your MTD software to communicate with HMRC’s systems. When you submit a VAT return or quarterly update, your software sends the data to HMRC through their MTD APIs.
Further Reading
- What Is Making Tax Digital? — the MTD fundamentals
- MTD Timeline & Roadmap — the full history and upcoming dates
- MTD for Income Tax (ITSA) — how the ITSA system works
- MTD for VAT Overview — the VAT requirements
- Tax Glossary — general UK tax terms
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