Guides / Making Tax Digital

Guide · Tax & Admin

Making Tax Digital for Income Tax: What Sole Traders and Landlords Need to Know

01Who it applies to, and when

MTD for Income Tax applies to self-employed people and landlords who complete a Self Assessment tax return, based on their qualifying income — total turnover from self-employment and property combined, before expenses.

• From 6 April 2026: qualifying income over £50,000.
• From 6 April 2027: over £30,000.
• From 6 April 2028: over £20,000.

The test uses your tax return from two years earlier — so your 2025–26 return decides whether you join in April 2027. Limited companies aren't affected, and partnerships aren't included yet. Some people can apply for an exemption, for example if age, disability or location make digital record-keeping unreasonable.

VAT-registered businesses will recognise the idea: MTD for VAT has applied to all of them since 2022.

02What you have to do

1. Keep digital records of your income and expenses, using MTD-compatible software — or spreadsheets connected to HMRC through "bridging" software.
2. Send a quarterly update to HMRC — a summary of income and expenses for the quarter. These aren't tax returns and don't include adjustments; they're just running totals.
3. Submit a final declaration by 31 January after the tax year ends, confirming your figures and any other income. This replaces the familiar Self Assessment return.

Payment dates are unchanged — the quarterly updates don't mean quarterly tax bills.

03The quarterly deadlines

For the 2026–27 tax year, updates are due by:

• 7 August 2026 — for 6 April to 5 July
• 7 November 2026 — for 6 July to 5 October
• 7 February 2027 — for 6 October to 5 January
• 7 May 2027 — for 6 January to 5 April

The same pattern repeats each year. Software usually sends reminders — but put them in your diary too.

04Penalties — and the first-year soft landing

MTD uses a points system. Each missed deadline earns a penalty point; reach the threshold (four points for quarterly updates) and you're fined £200, with a further £200 for each later miss until your record is clean again.

For the first group, who joined in April 2026, HMRC has said it won't issue penalty points for late quarterly updates during 2026–27. That doesn't extend to the final declaration, to late payment penalties or interest — and the updates still have to be sent before you can file. Treat the soft landing as a safety net, not a reason to skip them.

05Keeping the admin down

The businesses that find MTD painless are the ones that stopped treating bookkeeping as a once-a-year job. A few things help most:

• Connect your bank feed to your software so transactions arrive automatically. Categorising little and often beats a weekend of receipts in January.
• Photograph receipts as you go — most software reads them automatically.
• If you love your spreadsheet, keep it — but structure it properly (one row per transaction, consistent categories) and use bridging software. Our guide What Can Your Spreadsheets Tell You? covers the basics.
• Automate the repetitive bits — invoices from your job system into your accounts, supplier bills filed straight from email. This is exactly the kind of plumbing simple automations handle well.
• Use AI to understand, not to file. AI tools are good at explaining HMRC guidance in plain English — but check anything that affects your figures against gov.uk or with your accountant.

06What to do now

• Already in? Check your August update went in, and get ready for 7 November.
• Over £30,000? You're likely in from April 2027. Choose software and start keeping digital records now, so 2027 is a rehearsal you've already done.
• Between £20,000 and £30,000? You have until April 2028 — but starting early costs nothing.
• Unsure? HMRC's online checker on gov.uk tells you if and when you need to sign up, and your accountant can do it for you.

This guide is a plain-English overview, not tax advice. Rules and dates can change — check gov.uk or speak to your accountant about your own situation.