Making Tax Digital for UK Restaurants: Delivery Guide
Making Tax Digital (MTD) is HMRC's programme to move tax record-keeping and submission to digital formats. For UK restaurants — particularly those with significant delivery platform revenue — MTD affects two tax regimes: VAT and Income Tax.
Most restaurants on delivery platforms are already within the MTD for VAT regime, which became mandatory for most VAT-registered businesses in 2019 (extended to all VAT registrants in 2022). MTD for Income Tax is newer: mandatory from 6 April 2026 for self-employed individuals and landlords with qualifying income above £50,000.
This guide covers what both regimes mean for restaurant and delivery operators specifically, what the record-keeping requirements actually require, and how delivery platform revenue fits into the picture.
MTD for VAT: what you are already required to do
If your restaurant is VAT-registered — whether mandatory (above the £90,000 threshold) or voluntary (below it) — you are already within MTD for VAT. MTD for VAT applies to all VAT-registered businesses, not only those above the registration threshold; it was extended to all VAT registrants in April 2022. The core requirements are:
Digital record-keeping. VAT records must be kept digitally. This means using compatible software (Xero, QuickBooks, Sage, or another HMRC-recognised tool) rather than spreadsheets or paper records for your VAT-relevant transactions. Digital submission. Your VAT return must be submitted directly from compatible software via HMRC's API. You cannot type the numbers into the HMRC portal manually — the data must flow digitally from your records to the submission. No manual intervention in the digital chain. The MTD rules require that data flows digitally from source to submission without manual re-entry. You can use "digital links" — a file exported from one system and imported to another — but you cannot copy figures manually between steps.What this means for delivery platform revenue
For delivery operators, the "digital records" requirement touches how you record platform payouts. HMRC's guidance does not require order-level digitisation — you can record a weekly aggregate — but the record must be digital, VAT-coded, and part of the chain that produces your return.
The common non-compliant pattern is bookkeeping that records delivery income as a single bank-deposit figure entered manually into a spreadsheet, which is then used to calculate the VAT return. This breaks the digital link requirement if the spreadsheet is not HMRC-recognised software or does not have a digital link to the submission tool.
Compatible cloud accounting software (Xero, QuickBooks) satisfies the digital record-keeping requirement, provided you enter the correct VAT-coded entries. Simply having Xero does not make you compliant — the platform payout entries need to include the correct input VAT on commission, the gross revenue figure, and the commission expense. A net-deposit lump entry satisfies "digital" but not "correct."
MTD for Income Tax: what changes from April 2026
MTD for Income Tax Self Assessment (MTD for ITSA) is the more significant change for sole traders and unincorporated businesses. From 6 April 2026, sole traders and landlords with qualifying income above £50,000 must:
- Keep digital records of their business income and expenses using MTD-compatible software
- Submit quarterly updates to HMRC — four times per year, roughly aligned to the tax quarters (April-June, July-September, October-December, January-March)
- Submit an End of Period Statement at the end of the tax year to finalise the year's figures
- Submit a Final Declaration (replacing the annual Self Assessment return) to confirm the year's tax position
Who this affects in the restaurant sector
A sole trader running a UK restaurant or food business with total qualifying income above £50,000 from 6 April 2026 is within scope. Qualifying income includes all self-employment income and property income — not just delivery platform revenue. A sole-trader restaurant doing £120,000 in total sales (dine-in, delivery, and takeaway) is very likely within scope.
Limited companies are not currently within the MTD for ITSA regime — only sole traders and partnerships are in scope in the current rollout.
The quarterly update requirement
The most operationally significant change is the quarterly submission requirement. Instead of one Self Assessment return per year, sole traders within MTD for ITSA must submit a quarterly summary of income and expenses through their accounting software. The quarterly update is a summary, not a transaction-level report — but it must come from digital records, and it must be submitted within one month of each quarter end.
Q1 2026-27 (April-June 2026) note: HMRC has confirmed it will not apply penalty points for late submission of the Q1 quarterly update in the first year of the regime (2026-27). This grace period applies to Q1 only — subsequent quarters and subsequent years are subject to the full penalty framework.What delivery operators need to do
For a sole-trader restaurant with significant delivery revenue, meeting the MTD for ITSA quarterly update requirement means:
- Digital records from day one of the tax year — from 6 April 2026, all income and expenses must be captured digitally in MTD-compatible software
- Delivery platform payouts must be in the digital record — gross revenue, commission, and VAT must be captured in the software, not on paper or in non-compatible spreadsheets
- Quarterly close-off process — a monthly or quarterly accounting discipline to ensure the records are complete and ready to submit on time
Sole traders on delivery platforms and the £50,000 threshold
For sole-trader food delivery operators — not restaurants but individuals delivering for platforms like Deliveroo, Uber Eats, or Just Eat as a self-employed courier — the same rules apply. If total self-employment income exceeds £50,000, you are within scope of MTD for ITSA from April 2026.
The quarterly update requirement means income from each platform must be recorded digitally as it arrives, with periodic submissions to HMRC. For a high-volume delivery driver, this is a more significant change than for an accountant-serviced restaurant.
MTD and Digital Platform Reporting: the two-way data picture
MTD and the Digital Platform Reporting Rules (SI 2023/817) are separate regimes, but they overlap in one important way: both require accurate gross-revenue records for delivery platform income.
Under the Digital Platform Reporting rules, each platform submits an annual report to HMRC — due by 31 January following each calendar year — with your gross revenue broken down by calendar quarter. Under MTD, you submit quarterly income summaries from your own records. If your MTD quarterly submission is based on net deposits (understating income) and HMRC's platform data shows higher gross revenue, the discrepancy is visible at a quarterly granularity — not just at year-end.
Correct delivery payout reconciliation — gross revenue, commission, VAT on commission — is the foundation that makes both MTD compliance and consistent Digital Platform Reporting possible. See our VAT on delivery charges guide for the VAT treatment, and our HMRC Digital Platform Reporting guide for what the platforms report.
Practical checklist: MTD readiness for delivery operators
- [ ] VAT-registered? If yes, you are already within MTD for VAT. Check your software is HMRC-recognised and that VAT entries include gross, commission, and input VAT correctly.
- [ ] Sole trader with income >£50k? You are within scope for MTD for ITSA from 6 April 2026.
- [ ] Using compatible software? Xero, QuickBooks, Sage, and most cloud accounting tools are HMRC-recognised for MTD. Spreadsheets generally are not, unless specifically certified.
- [ ] Delivery payouts recorded gross? Net-deposit entries satisfy "digital" but not "accurate." Quarterly updates need correct income figures.
- [ ] Quarterly close-off process in place? For MTD for ITSA, you need clean quarterly records by one month after each quarter end.
Key takeaways
- MTD for VAT has applied to most VAT-registered restaurants since 2019-2022 — if you are VAT-registered, you should already be in the digital record-keeping regime.
- MTD for Income Tax is mandatory from 6 April 2026 for sole traders with qualifying income above £50,000; threshold drops to £30,000 from 6 April 2027.
- Quarterly updates are the most operationally significant change — four summary submissions per year, each due within one month of the quarter end.
- Q1 2026-27 grace period: HMRC will not apply penalty points for late Q1 updates in the first year of the regime.
- Delivery platform gross revenue must be in the digital record — net-deposit bookkeeping fails both MTD accuracy requirements and Digital Platform Reporting consistency.
This guide covers Making Tax Digital requirements for UK restaurants and delivery operators as of 2026. MTD thresholds and timelines are subject to change — check HMRC's current guidance for the latest requirements. This is not tax advice. For your specific MTD obligations and software setup, consult a qualified accountant.