Making Tax Digital for Income Tax
Making Tax Digital for Income Tax, in plain English.
If you're self-employed or you let property, this is the biggest change to how you report tax in a generation — and it has already started. Here's who it catches, when, and what you actually have to do about it.
The short version
Making Tax Digital for Income Tax replaces the once-a-year tax return with digital records plus four updates a year, followed by a final declaration. It started on 6 April 2026 for sole traders and landlords with qualifying income over £50,000, and widens to £30,000 in April 2027 and £20,000 in April 2028.
The bit that catches people out: qualifying income is your turnover before expenses, not your profit.
Does it affect you, and when?
Add together everything you take from self-employment and from property, before taking any expenses off. Employment, pensions and dividends don't count towards it.
Your start date
April 2027
You're in the second wave.
A guide, not a ruling. HMRC works from the figures on a specific year's tax return, so if you're near a threshold — or your income moves about — it's worth having someone check the actual return rather than the rough number.
What actually changes
Today you keep whatever records suit you and file one Self Assessment return after the tax year ends. Under Making Tax Digital, three things change.
- Your records have to be digital. Every item of business income and expense recorded in software, with the amount, the date and the category.
- You send four updates a year. Short summaries of income and expenses, sent from that software. They aren't tax returns and nothing is due to be paid off the back of them.
- A final declaration replaces your tax return. After the fourth update you finalise the year — adjustments, reliefs, any other income — and that submission does the job your Self Assessment return does now.
What doesn't change: your payment dates, your accounting period, and the fact that you'll still be paying tax on your profit rather than your turnover.
Who has to do it, and from when
| From | If your qualifying income was over | Measured on your return for |
|---|---|---|
| 6 April 2026 | £50,000 | 2024 to 2025 |
| 6 April 2027 | £30,000 | 2025 to 2026 |
| 6 April 2028 | £20,000 | 2026 to 2027 |
It applies to sole traders and landlords who file Self Assessment. Partnerships will be brought in at some point, but HMRC hasn't announced a date.
What counts as qualifying income
This is where most of the confusion sits, so it's worth being precise. Qualifying income is your total income from self-employment and property before expenses — turnover, not profit. Someone turning over £55,000 with £20,000 of costs has £35,000 of profit, but £55,000 of qualifying income, and they were in from April 2026.
If you have more than one trade, or a business and a rental property, you add them together. Landlords in particular get caught out by this, because gross rent counts in full before the mortgage, the agent's fee or a single repair comes off — there's more on that in our guide for landlords.
Counts towards it: self-employment turnover, gross rental income, your share of jointly-owned property income.
Doesn't count: employment income through PAYE, your share of partnership profits, dividends including from your own company, the State Pension and private pensions.
The four deadlines
Updates are cumulative — each one covers the tax year so far rather than just the last three months, so a mistake in quarter one gets tidied up in quarter two rather than haunting you.
| Period covered | Deadline |
|---|---|
| 6 April – 5 July | 7 August |
| 6 April – 5 October | 7 November |
| 6 April – 5 January | 7 February |
| 6 April – 5 April | 7 May |
The final declaration then follows, on the same 31 January deadline you're used to. In practice it does the same job your Self Assessment return does now.
What happens if you're late
HMRC has been deliberately gentle to begin with, but not indefinitely.
- Quarterly updates: there are no penalties for missing these in the 2026 to 2027 tax year. You still have to submit them before you can file your return, so a missed one doesn't disappear — it just waits for you.
- Late submissions generally: a points system. You collect a point per missed deadline, and at four points you get a £200 penalty, then another £200 for each miss after that. Points below the threshold drop off after 24 months.
- Late payment, 2026 to 2027: nothing for the first 15 days. From day 16, 3% of what was outstanding at day 15. From day 31, that 3% plus a further 3% of what was outstanding at day 30, and then interest running at an annual rate of 10% on the balance.
- Late payment from 2027 to 2028: the same shape, but those two 3% charges become 4%.
Software: what you actually need
HMRC doesn't provide software, and you can't file a quarterly update from a spreadsheet on its own. You need something MTD-compatible — either proper bookkeeping software, or a spreadsheet plus bridging software that talks to HMRC for you.
We work in Xero, QuickBooks and FreeAgent. If you're already on one of them, you don't need to move — we'll work in whatever you've got. If you're on a spreadsheet or a carrier bag, we'll put you on whichever of the three actually fits how you work, rather than whichever one we happen to prefer.
Can you get out of it?
Some people can. Exemptions exist — the main one being that you're digitally excluded, whether through age, disability, location or religious grounds — and there are a small number of circumstances where exemption is automatic. It's an application to HMRC rather than something you decide for yourself, and it's worth getting help with, because a refused application still leaves you with a start date.
What to do now
- Work out your number. Turnover from self-employment plus gross rent. Use the checker above, then confirm it against your last return.
- Find your start date and put it in the calendar with a month's warning in front of it.
- Get on software before you have to. Moving your records mid-year is far worse than moving them at the start of one.
- Sort out how receipts reach your records. This is the part that actually kills people — not the filing, the collecting. Four deadlines a year is four times the opportunity to discover the shoebox is empty.
- Decide who's pressing the button. You can file the updates yourself or have an agent do it. Either is fine. Not deciding isn't.
We've been doing MTD since April.
We're not writing about this from the sidelines — we've been filing quarterly updates for clients since it went live, so we know where it snags rather than what the guidance says it should do.
We'll handle the lot: working out whether it catches you and when, getting you registered, getting your records onto software that suits you, the four updates and the final declaration. One fixed fee, agreed before we start any work.
Message us on WhatsAppCall 07868 005731
Or email whitfieldandhanson@gmail.com — we reply the same working day.
- We tell you your start date, for free, on the phone
- Xero, QuickBooks or FreeAgent — whichever fits
- All four quarterly updates filed for you
- Final declaration handled, same as your return is now
- HMRC-registered agents, so we deal with them directly
- Doncaster based — you can come and sit down with us
Common questions
Is qualifying income before or after expenses?
Before. It's your turnover from self-employment plus your gross rental income, added together, with no expenses deducted. This is the single most common misunderstanding about MTD — plenty of people who think their £38,000 profit keeps them out until 2028 are actually turning over £62,000 and were in from April 2026.
Do I still file a Self Assessment tax return?
Not in the form you're used to. The final declaration you submit after the fourth quarterly update does the same job — it's where the adjustments, reliefs and any other income go, and it's still due by 31 January. What disappears is the once-a-year-and-nothing-else rhythm.
Do I pay tax four times a year now?
No. The quarterly updates are information, not payment. Your payment dates don't change, and neither do payments on account if you make them.
What if I'm employed as well as self-employed?
Your PAYE employment income doesn't count towards the qualifying income threshold at all. Only the self-employment and property side does. Your employment income still gets reported, but at the final declaration stage.
I've got a job, a small business and one rental flat. What's my number?
Add the business turnover to the gross rent and ignore the job. If the business turns over £26,000 and the flat brings in £9,600 a year, that's £35,600 of qualifying income — which puts you in from April 2027.
My income dropped. Am I out?
Probably not. Once a threshold has caught you, a later fall in income doesn't remove the obligation — the start date still applies. Genuinely ceasing self-employment and property income before your start date is the main exception.
Can I just carry on with my spreadsheet?
Only with bridging software attached to it, because a quarterly update has to be submitted digitally to HMRC. It's allowed, but think carefully — you'd be doing the manual work four times a year rather than once.
Will you tell me my start date without charging me?
Yes. It's a five-minute conversation and we don't bill for it. Ring 07868 005731 with a rough idea of your turnover and we'll tell you where you stand.
Related
General guidance, not advice. This page explains the rules as they stand on 12 August 2026. It isn't tax advice for your situation, and MTD is still moving — dates and detail have changed before and may change again. Check anything important against GOV.UK, or ring us and we'll talk it through.
Sources: HMRC guidance on eligibility, qualifying income and MTD penalties, GOV.UK. Quarterly update deadlines per HMRC. Reviewed by Henry Hanson, HMRC-registered agent.