What it is
Making Tax Digital (MTD) for VAT is HMRC's requirement that VAT-registered businesses above the relevant threshold keep digital records and submit VAT returns using MTD-compatible software, rather than typing figures into HMRC's old online portal. Tide's role is to act as, or connect to, MTD-compatible software: your transaction feed constitutes digital records, and either Tide's own submission route or a connected third-party package (Xero, QuickBooks, FreeAgent) handles the actual VAT return submission to HMRC.
Who can access it and on which plans
MTD-related functionality — categorisation feeding a VAT-ready dataset, and integrations with MTD-compatible software — tends to be available broadly rather than restricted to a top plan, since it's tied to a legal obligation many customers have. That said, some advanced features or specific integrations may sit on particular plans. Check current plan inclusion on our plans and fees page, and separately confirm with HMRC or your accountant that whichever route you use is actually MTD-compliant for your situation.
How it works step by step
- Register for MTD for VAT with HMRC if you haven't already (this is an HMRC process, not a Tide one).
- Use Tide's categorised transaction feed as your digital VAT records, or sync it into MTD-compatible software.
- Reconcile VAT-relevant transactions each period — sales VAT collected, purchase VAT reclaimable.
- Submit your VAT return using either Tide's route where offered, or the connected third-party software.
- Keep digital records for the period required by HMRC rather than relying on paper backups.
Current cost and allowances
There is no separate 'MTD fee' as such — the cost, if any, is typically bundled into your plan or into whichever third-party accounting software you connect for submission. Some MTD-compatible bridging or filing tools carry their own subscription outside Tide entirely. Check our plans and fees page for what's included at your tier, and confirm submission-route costs with whichever software actually files the return.
A worked example
A VAT-registered online retailer above the MTD threshold uses Tide for the current account and syncs transactions into Xero. Every sale and purchase with VAT is categorised as it happens; quarterly, the bookkeeper reviews the VAT return Xero has calculated from the synced data, adjusts for anything miscategorised, and submits directly to HMRC through Xero's MTD-compliant filing route. Tide never files the return itself in this case — it supplies clean digital records to the software that does.
Limitations and exclusions
Tide is not a substitute for understanding your VAT scheme (standard, flat rate, cash accounting) or for correct VAT treatment of your specific sales — categorisation errors will produce an incorrect VAT return regardless of how clean the underlying record-keeping is. It also doesn't handle other MTD obligations, such as MTD for Income Tax Self Assessment, which is a separate and later-arriving requirement with its own rules.
How it compares with alternatives
A business could keep MTD-compliant digital records using any bank plus a standalone MTD bridging tool or full accounting package — the record-keeping obligation is software-agnostic. Tide's advantage is that the digital records exist as a by-product of normal account use rather than a separate exercise; the trade-off is that VAT scheme nuance and return accuracy still depend on you or your accountant, not the account.
Relationship to the REFER200 offer
No connection. MTD compliance is a record-keeping and tax-filing matter and has no bearing on card spend or Instant Saver balances, so it neither helps nor hinders either step of the REFER200 campaign.