Making Tax Digital (MTD) for Income Tax has started. Since 6 April 2026, some sole traders and landlords have had to keep digital records and send quarterly updates to HMRC using compatible software. The next group is due to join from 6 April 2027.
This update covers the phasing, qualifying income, quarterly updates and steps to take this winter. Details were checked against GOV.UK on 5 November 2026. The rules can change, so check the current guidance before acting.
The phasing so far
Your start date depends on your qualifying income in a particular tax year. GOV.UK's eligibility guidance sets out three stages:
- Over £50,000 of qualifying income in the 2024 to 2025 tax year: you should have started using MTD for Income Tax from 6 April 2026
- Over £30,000 of qualifying income in the 2025 to 2026 tax year: you will need to use it from 6 April 2027
- Over £20,000 of qualifying income in the 2026 to 2027 tax year: you will need to use it from 6 April 2028
The April 2027 group is assessed on the 2025 to 2026 tax year, the year covered by the Self Assessment return due by 31 January 2027.
HMRC says it reviews Self Assessment returns each year and will write to confirm your start date if your income is above the threshold. If you do not receive a letter, it is still your responsibility to check whether you need to use MTD for Income Tax.
Who it applies to
According to GOV.UK, you only need to use MTD for Income Tax if:
- you are a sole trader or landlord registered for Self Assessment
- you have self-employment or property income
- your qualifying income is above the threshold for the relevant tax year
Partnerships do not currently need to use it. HMRC says partnerships will need to use MTD for Income Tax in future, but no timeline has been set.
What "qualifying income" means
GOV.UK defines qualifying income as your total income from self-employment and property. It is measured before expenses, which is also known as turnover. This catches some people out: a landlord with £32,000 of rent and significant costs may still be over the £30,000 threshold.
Other income does not count towards qualifying income. GOV.UK lists examples that are excluded:
- employment income taxed through PAYE
- your share of partnership profit as an individual partner
- dividends, including dividends from your own company
- the State Pension and private pensions
If you own property jointly, only your share of the property income counts. GOV.UK gives the example of a property earning £50,000 split equally between two owners, which gives each owner £25,000 of qualifying income.
Quarterly updates and the tax return
Under MTD for Income Tax, you keep digital records of your self-employment and property income and expenses, then send quarterly updates through compatible software. GOV.UK's guidance on quarterly updates sets out the standard periods and deadlines:
| Update period | Deadline |
|---|---|
| 6 April to 5 July | 7 August |
| 6 April to 5 October | 7 November |
| 6 April to 5 January | 7 February |
| 6 April to 5 April | 7 May |
Each update is a running total for the tax year so far. It contains totals for each income and expense category, not details of individual receipts or invoices. GOV.UK describes quarterly updates as summaries, not tax returns. Calendar quarters can be chosen in some cases, but only before you send your first update.
You still need to submit a tax return through your software. GOV.UK states that the deadline is 31 January following the end of the relevant tax year.
Penalties for late updates
GOV.UK says HMRC will not apply penalty points for late quarterly updates during the 2026 to 2027 tax year, although penalty points still apply to late tax returns. After that year, a missed quarterly update deadline earns a penalty point, and reaching 4 points triggers a £200 penalty.
Compatible software
You need software that works with MTD for Income Tax. HMRC's software finder explains that:
- HMRC does not recommend any product or software provider
- some products, sometimes called bridging software, connect to existing records such as spreadsheets and can send quarterly updates and tax returns
- free products are available for people with simple tax affairs, though they may have limits, such as a cap on the number of transactions
Exemptions
Some people are exempt automatically and others must apply. GOV.UK's exemptions guidance includes, among others:
- partnerships, which do not currently need to use MTD for Income Tax
- people whose qualifying income is £20,000 or less
- people without a National Insurance number before the start of the tax year
- some exemptions linked to particular claims or pages on the tax return
You can apply for an exemption if you are digitally excluded, meaning it is not reasonable for you to use compatible software, for example because of a health condition or disability, or because you have no suitable internet access. GOV.UK says reasons such as being unfamiliar with accounting software or the extra cost or time are not accepted. People who are exempt must still report their income through Self Assessment.
Practical steps for this winter
If your qualifying income for 2025 to 2026 may be over £30,000, the next few months are a good time to prepare:
- Work out your qualifying income. Add up gross self-employment and property income for 2025 to 2026, before expenses, using the GOV.UK definition.
- File your 2025 to 2026 return on time. HMRC uses your return to assess whether and when MTD applies.
- Check for exemptions. Review the GOV.UK exemptions list before you sign up.
- Review your records. Plan how you will keep digital records for each business or property from 6 April 2027.
- Choose software. Use HMRC's finder to shortlist products that cover all your income types.
- Understand sign-up. GOV.UK's sign-up guidance explains what you need. If you use an agent, they can sign you up through a separate route.
- Agree responsibilities. If someone helps with your records, agree in writing who keeps them, who prepares the figures and who sends each update.
Sources
- Check if you're eligible for Making Tax Digital for Income Tax
- Work out your qualifying income for Making Tax Digital for Income Tax
- Send quarterly updates
- Submit your tax return using Making Tax Digital for Income Tax
- Find software that's compatible with Making Tax Digital for Income Tax
- Find out if you can get an exemption from Making Tax Digital for Income Tax
- Sign up for Making Tax Digital for Income Tax
TaxSpex supports sole traders and individuals with Self Assessment. Whether any Making Tax Digital for Income Tax work, including software or quarterly reporting, is within scope is confirmed before engagement. See Self Assessment support or Accounting for sole traders. This article is general information, not advice for your circumstances.