The short answer: Making Tax Digital (MTD) for Income Tax is being phased in for sole traders and landlords. If it applies to you, you will need to keep digital records, use compatible software, send HMRC an update every quarter and complete your tax return through that software. The first stage started on 6 April 2026.
Who has to use it, and when
MTD for Income Tax applies to people with income from self-employment or property. It is being introduced in stages, based on your income:
- From 6 April 2026: if your qualifying income is over £50,000 (measured using the 2024 to 2025 tax year)
- From 6 April 2027: if it is over £30,000 (measured using the 2025 to 2026 tax year)
- From 6 April 2028: if it is over £20,000 (measured using the 2026 to 2027 tax year)
You can check whether you need to sign up on gov.uk. Some people are exempt, for example if they are digitally excluded.
What you have to do
- Keep digital records of your self-employment and property income and expenses.
- Use software that works with MTD. You choose and authorise it yourself, or your agent acts for you.
- Send a quarterly update to HMRC through that software.
- Complete your annual tax return using the software.
Quarterly update deadlines
Most people use the tax-year periods below. There is also a calendar-quarter option for people whose accounting period runs 1 April to 31 March.
- 6 April to 5 July: send by 7 August
- 6 April to 5 October: send by 7 November
- 6 April to 5 January: send by 7 February
- 6 April to 5 April: send by 7 May of the following year
Each update contains totals for each income and expense category you use. HMRC does not receive your individual receipts or invoices.
What happens if you are late
HMRC uses a points-based penalty system. You get a penalty point for each missed deadline, and when you reach four points you get a £200 penalty, with another each time you miss a further deadline. For the 2026 to 2027 tax year, gov.uk says there are no penalties for missing a quarterly update deadline, but you still need to send the updates. Check gov.uk for the current position.
How to get ready now
- Keep business money in a separate bank account.
- Move your records out of shoeboxes and spreadsheets into accounting software.
- Check the software you choose is compatible with MTD for Income Tax.
- Diarise the quarterly dates above.
- Talk to your accountant early, before your first deadline.
How we can help
We work in Xero and QuickBooks and can set up your records, keep your books up to date and prepare your quarterly updates and tax return. If you are not sure whether MTD applies to you yet, we will tell you honestly. See our Self Assessment and bookkeeping services.
Sources: gov.uk, Making Tax Digital for Income Tax guidance and penalties pages, checked 24 September 2026.
Common questions
Do I still need to file a tax return?
Yes. You will still complete your annual tax return, but through your MTD software, as well as sending the quarterly updates.
What if my income is below the threshold?
It does not apply to you yet. The thresholds fall in April 2027 and April 2028, so it is worth preparing early. Some people can also join voluntarily.
Does HMRC see all my receipts?
No. Quarterly updates contain totals for each income and expense category, not individual records.
General information only, not personal advice. Tax rules, rates and thresholds change, so check gov.uk or speak to us about your own situation.