Making Tax Digital for Income Tax is now live for some sole traders and landlords.
From 6 April 2026, individuals with qualifying self-employment and property income above £50,000 must use Making Tax Digital for Income Tax unless an exemption applies. The threshold falls to £30,000 from 6 April 2027 and £20,000 from 6 April 2028.
HMRC refers to this as Making Tax Digital for Income Tax, or MTD for Income Tax.
HMRC: Find out if and when you need to use Making Tax Digital for Income Tax
What does Making Tax Digital change?
Making Tax Digital changes how some sole traders and landlords keep records and report information to HMRC.
If MTD applies to you, you will need to keep digital records, send quarterly updates to HMRC using compatible software and submit your annual tax return through compatible software.
Quarterly updates are not four extra tax returns. They are summaries of the income and expense records you keep during the year.
You will still complete an annual tax return after the tax year ends.
HMRC: Making Tax Digital for Income Tax
Who needs to use Making Tax Digital?
MTD for Income Tax applies to individuals who are registered for Self Assessment and receive qualifying income from self-employment, property, or a combination of the two.
HMRC is introducing the rules in stages:
| Qualifying income shown on | Qualifying income | MTD starts |
|---|---|---|
| 2024/25 tax return | More than £50,000 | 6 April 2026 |
| 2025/26 tax return | More than £30,000 | 6 April 2027 |
| 2026/27 tax return | More than £20,000 | 6 April 2028 |
The word more than matters. If your qualifying income is exactly £30,000, you do not exceed the £30,000 threshold.
HMRC normally uses the qualifying income shown on an earlier Self Assessment return to decide when you need to start using MTD.
HMRC: Check when you need to start using Making Tax Digital
What is qualifying income?
Qualifying income is your total gross income from self-employment and property before expenses.
It is not your taxable profit.
For example, if you have £22,000 of self-employment turnover and £17,000 of gross property income, your qualifying income is £39,000.
If those were your figures for 2025/26, you would normally need to start using MTD from 6 April 2027 because your qualifying income exceeds £30,000.
The same principle applies if your expenses are high. A sole trader with £55,000 turnover and £30,000 of expenses still has qualifying income of £55,000.
Salary, dividends and bank interest are not simply added to the MTD qualifying income figure. The test focuses on qualifying self-employment and property income.
HMRC: Work out your qualifying income
Does Making Tax Digital apply to landlords?
Yes.
Property income counts towards qualifying income, even if you do not run a self-employed business.
For example, someone with £35,000 of gross rental income and no self-employment income would normally need to start MTD from 6 April 2027 if that £35,000 was their qualifying income for 2025/26.
Self-employment and property income are also combined for the threshold test.
If you had £18,000 of self-employment turnover and £17,000 of gross property income, your total qualifying income would be £35,000.
Multiple UK properties owned by the same individual are normally treated as part of the same UK property business.
If you want a simple explanation of how rental income is taxed, see How Is Rental Income Taxed in the UK? A Simple Guide for Landlords.
What digital records do you need to keep?
MTD requires you to keep digital records of your relevant self-employment and property income and expenses.
HMRC says you should create those records as close to the transaction date as possible. You must create the records needed for a quarterly period before you send that quarterly update or before its deadline.
This does not mean everyone needs complicated accounting software.
A landlord with one property and a small number of transactions may need a much simpler system than a sole trader with hundreds of transactions each month.
The important point is that the required records are kept digitally and can feed into software that works with MTD.
Do you need special software?
Yes. You need software that works with Making Tax Digital for Income Tax.
The software must be able to create or use digital records, send quarterly updates and submit your tax return.
HMRC provides a software finder to help taxpayers and agents choose compatible software.
You do not necessarily need the most expensive or complicated product. Choose software that suits the size and complexity of your self-employment or property activity.
HMRC: Find software that works with Making Tax Digital for Income Tax
What are quarterly updates?
Every three months, your compatible software adds together the digital income and expense records for each relevant business.
It then sends those totals to HMRC as a quarterly update.
The updates are cumulative. This means each update covers the period from the start of the tax year to the end of that update period.
For example, the second standard quarterly update covers 6 April to 5 October, not just the three months since the first update.
You do not need to make all of the accounting and tax adjustments required for your annual tax return before sending each quarterly update.
When are the quarterly deadlines?
For taxpayers using the standard quarterly periods, the deadlines are:
| 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 |
Some taxpayers with accounting periods running from 1 April to 31 March can use calendar update periods instead. The deadlines remain 7 August, 7 November, 7 February and 7 May.
HMRC: Quarterly update periods and deadlines
Does MTD mean paying tax four times a year?
No.
Quarterly updates do not create quarterly Income Tax payment dates.
The normal Self Assessment payment timetable continues to apply.
MTD changes how you keep and report records. It does not turn Income Tax into a quarterly payment system.
Your software may show an estimate of your tax position during the year, which can help with budgeting, but the quarterly update itself is not a tax bill.
What happens at the end of the tax year?
You still need to complete an annual tax return.
After the tax year ends, you can check and correct the self-employment and property figures recorded during the year, make any tax adjustments, claim allowances or reliefs and add other income or gains where required.
Your annual tax return then brings the full tax position together.
For someone using MTD from 6 April 2026, the 2026/27 tax return will normally need to be submitted by 31 January 2028.
HMRC: Making Tax Digital timetable
Can an accountant or tax adviser manage MTD for you?
Yes.
You do not have to manage Making Tax Digital yourself.
An authorised accountant or tax adviser can use compatible software to help manage digital records, quarterly updates and the annual tax return.
Some people may want an adviser to manage the whole process. Others may prefer to keep their own records and ask an adviser to handle the submissions.
You still remain responsible for providing complete and accurate information.
For people who are not confident with accounting software or digital record keeping, using an adviser may be easier than trying to manage the process alone.
What if you cannot use digital systems?
Some people may qualify for an exemption from Making Tax Digital.
HMRC can consider an exemption where someone is digitally excluded and cannot reasonably use digital systems. Some exemptions apply automatically, while others require an application.
Simply preferring paper records or finding software inconvenient does not automatically mean an exemption will apply.
If you are exempt from MTD, you still need to report your income and gains through Self Assessment in the normal way.
HMRC: Apply for an exemption from Making Tax Digital for Income Tax
What happens if you miss a quarterly deadline?
HMRC uses a points-based penalty system for late MTD submissions.
For the 2026/27 tax year, HMRC will not apply penalty points for late quarterly updates.
You still need to keep digital records and send all required quarterly updates before you can submit your annual tax return.
For later tax years, missing a quarterly deadline can result in a penalty point. The penalty threshold for quarterly updates is four points. Once you reach the threshold, HMRC can charge a £200 penalty, with further £200 penalties for additional missed deadlines while you remain at the threshold.
Separate rules apply to late payment of tax.
HMRC: Penalties for Making Tax Digital for Income Tax
What should sole traders and landlords do now?
Start by checking your qualifying income.
If your qualifying income was more than £50,000 in 2024/25, you should already be using MTD from 6 April 2026 unless an exemption applies.
If your qualifying income was more than £30,000 in 2025/26, you should prepare to start from 6 April 2027.
If MTD applies to you, decide how you will keep your digital records, choose compatible software and decide whether you will manage the process yourself or use an accountant or tax adviser.
The earlier you organise the records and software, the easier the first quarterly update should be.
Need help with Making Tax Digital?
Sat Tax supports UK sole traders and landlords with Making Tax Digital for Income Tax and Self Assessment.
We can help you check whether MTD applies, choose a practical record-keeping approach, manage quarterly submissions and complete the annual tax return.
If you would like help with Making Tax Digital, get in touch with Sat Tax to discuss your circumstances and the support you need.
This article is for general information only and is not personal tax advice. Tax treatment and reporting requirements depend on your circumstances and the tax rules in place at the relevant time.
