Making Tax Digital for Income Tax started on 6 April 2026 for sole traders and landlords with qualifying income over £50,000. If that is you, you must keep digital records, send four quarterly updates a year through recognised software, and file your tax return through that software by 31 January. This guide shows how to check if you are in scope, what to file and when, and how to set up a simple quarterly routine.
Search intent: you want to know whether Making Tax Digital applies to you, what changes in practice, and what to do next. That answer is in the next two sections. Everything after that is the detail, the deadlines table, and a worked example you can copy.
Rates and rules last reviewed: October 2026. Sources are HMRC guidance on GOV.UK, which confirms the thresholds, the quarterly update model, and the next phase from April 2027.
What is Making Tax Digital for Income Tax?
Making Tax Digital for Income Tax is HMRC’s system for reporting self-employment and property income digitally through the year, using recognised software to keep records, send quarterly updates, and submit your final tax return, instead of filing one annual Self Assessment return on the HMRC website.
It does not change how much tax you pay, the tax rates, or the 31 January payment date. It changes how often you report and how you keep records. Quarterly updates are summaries, not extra tax returns. You do not pay tax four times a year because of them.
If you already use Making Tax Digital for VAT, this is a separate system. Being VAT registered does not put you in or out of scope for Income Tax, and the two have different thresholds and deadlines.
Who needs to use Making Tax Digital for Income Tax in 2026?
You need to use it from 6 April 2026 if you are a sole trader or landlord registered for Self Assessment and your qualifying income in the 2024 to 2025 tax year was over £50,000. Qualifying income is your gross income from self-employment and property combined, before expenses, allowances or tax are deducted.
That last point catches people out. Profit does not decide this. Turnover does.
| You start using MTD from | If your qualifying income was over | Based on this tax year |
|---|---|---|
| 6 April 2026 | £50,000 | 2024 to 2025 |
| 6 April 2027 | £30,000 | 2025 to 2026 |
| 6 April 2028 | £20,000 | 2026 to 2027 |
HMRC confirmed in October 2026 that the April 2027 phase will bring in around 1,077,000 more sole traders and landlords, on top of those already using the service since April 2026. If you are in the £30,000 to £50,000 band, you have about six months to prepare, and you can sign up early voluntarily to practise.
Income that does not count towards the threshold includes PAYE salary, pensions, dividends and savings interest. If you have a salary job plus a sole trader business, only the self-employment (and any property) income counts for the test, though your salary still goes on your final tax return.
Tip: Add your sources together before you decide. A sole trader with £38,000 of trading income and £15,000 of rental income has £53,000 of qualifying income. That is over the 2026 threshold, even though neither source passes it alone.
Worked example: is Maya in scope, and what does she file?
Maya is a freelance brand designer in Manchester, a sole trader with no rental income. Her 2024 to 2025 figures were:
- Turnover (gross income invoiced): £58,400
- Allowable expenses: £18,200
- Profit: £58,400 minus £18,200 = £40,200
Her profit is below £50,000, but her qualifying income is £58,400, which is over the threshold. She is in scope from 6 April 2026. If you are unsure about your own position, run your figures through LancerBill’s UK income tax calculator to see your profit and estimated tax, then compare your gross turnover, not the profit, against the threshold table above.
Now her first year under the system. Maya keeps digital records as she goes and sends cumulative quarterly updates. Cumulative means each update covers the tax year so far, not just that quarter, so mistakes in an earlier quarter are corrected in the next update rather than by amending the old one.
| Quarterly update | Period covered (cumulative) | Income in period added | Expenses in period added | Cumulative income | Cumulative expenses | Deadline |
|---|---|---|---|---|---|---|
| 1 | 6 Apr to 5 Jul 2026 | £14,750 | £3,920 | £14,750 | £3,920 | 7 Aug 2026 |
| 2 | 6 Apr to 5 Oct 2026 | £13,900 | £4,110 | £28,650 | £8,030 | 7 Nov 2026 |
| 3 | 6 Apr to 5 Jan 2027 | £15,600 | £4,480 | £44,250 | £12,510 | 7 Feb 2027 |
| 4 | 6 Apr to 5 Apr 2027 | £12,950 | £3,690 | £57,200 | £16,200 | 7 May 2027 |
Check the maths: £14,750 plus £13,900 plus £15,600 plus £12,950 = £57,200 for the year. Expenses: £3,920 plus £4,110 plus £4,480 plus £3,690 = £16,200. Her final profit for the year is £57,200 minus £16,200 = £41,000, confirmed in her tax return by 31 January 2028, which is also when she pays.
For a sense of the bill on a profit like that, see our guide on how much tax a self-employed person should set aside. The habit that makes quarterly reporting painless is the same one that makes January painless: record income when you invoice, not when you panic. And while the tax reserve waits, it can earn interest. Our guide to compound interest for freelancers shows how it adds up.
What are the quarterly deadlines for 2026 to 2027?
Quarterly updates are due on 7 August, 7 November, 7 February and 7 May, each covering the standard quarter that ended about a month earlier. Your tax return, sometimes called the final declaration, is still due by 31 January after the tax year ends, and that is when tax is paid.
The full 2026 to 2027 calendar is in Maya’s table above. Two dates deserve a note. First, 31 January 2027 is still a normal Self Assessment deadline: your 2025 to 2026 return goes through the old system, even if you are already sending quarterly updates for 2026 to 2027. Second, the second quarterly update for 2026 to 2027 is due on 7 November 2026, so if you are in the first cohort and have not sent it yet, that is your next hard date.
HMRC has said it will not apply penalty points for late quarterly updates during the 2026 to 2027 tax year. That is a soft landing for year one, not a reason to skip them: you cannot submit your MTD tax return until your quarterly updates are in, and late filing and late payment penalties still apply to the tax return itself. If you have already missed a Self Assessment deadline under the old rules, our guide on what to do after missing the Self Assessment deadline covers the penalties and the fix.
Watch out: HMRC began signing up people in September 2026 who it believes should already be in the system but had not registered themselves. Signing up yourself is better: you choose your software, check your details are right, and control the timing.
What do you actually have to do? A 5-step setup
Getting set up takes an afternoon if your records are tidy, and longer if they are in a shoebox. Work through these steps in order.
- Check your start date. Compare your qualifying income for the relevant year against the threshold table. If you are over £30,000, even if you are not mandated until April 2027, start preparing now.
- Choose recognised software. HMRC does not provide software. You need software that works with Making Tax Digital for Income Tax to keep records, send updates and file the return. HMRC publishes a software finder on GOV.UK. If you love spreadsheets, bridging software can link a spreadsheet to HMRC, as long as the links are digital and you do not retype totals by hand.
- Sign up before your start date. You, or your agent if you have one, sign up on GOV.UK. Do not leave this to the first deadline week.
- Keep digital records from day one. Every sale and expense needs a digital record with the date, amount and category. Raising invoices digitally helps here: if your invoices already live in a system, half the record keeping is done. See our guide on how to invoice as a sole trader in the UK for what each invoice must show.
- Send updates quarterly, then file and pay in January. Put the four 7th-of-the-month deadlines in your calendar with a reminder a week earlier.
For your invoicing itself, LancerBill’s invoice generator creates clean, numbered invoices you can download and record straight into your bookkeeping, with no signup. It is not MTD filing software, and you still need recognised software for the HMRC submissions, but tidy invoices make the digital records step far easier.
A decision framework: full software, spreadsheet plus bridging, or an accountant?
Competitors usually just tell you to buy software. The right choice depends on how messy your records are and how much you value your time. Use this framework, which is the element most guides skip.
| Your situation | Best fit | Why |
|---|---|---|
| One business, invoices raised in software, expenses on one card | Full MTD software | Records, updates and the return all happen in one place. Least friction. |
| Simple trade, years of tidy spreadsheets, low volume | Spreadsheet plus bridging software | Keeps your existing system. You must keep digital links intact and never retype totals. |
| Two or more income sources, property plus trading, or messy records | Accountant or bookkeeper using MTD software | Separate quarterly updates are needed per business, and errors compound. Paying for help is cheaper than fixing a bad year. |
| Not mandated until April 2027 or 2028 | Voluntary sign-up, or practise in parallel | A practice year with the first-year penalty soft landing is the cheapest training you will get. |
Two rules apply whatever you choose. First, if you have more than one business, or trading income and property income, you keep separate records and send a separate quarterly update for each source. Second, keep an eye on profitability as you go: quarterly figures are a free health check. LancerBill’s profit margin calculator turns a quarter’s income and costs into a margin you can compare quarter to quarter, so a bad quarter shows up in November, not the following January.
Think of quarterly updates as four small Januarys instead of one big one. Each one should take under an hour if your records were kept as you went.
Common mistakes sole traders make with MTD
Testing profit instead of turnover. Maya’s example shows the trap: £40,200 profit, still in scope. Always test gross qualifying income.
Assuming a letter means you are registered. An HMRC letter tells you that you may need to act. You still choose software and sign up, unless HMRC has signed you up automatically, in which case you still need software and records from the start of the tax year.
Treating quarterly updates as tax returns. They are summaries of income and expenses. No tax is calculated or paid on them, and errors are fixed in the next cumulative update.
Leaving records to the deadline week. Digital records must be created as close to the transaction as practical. Rebuilding three months of invoices and receipts in August is exactly what the system is designed to end.
Forgetting the old system runs in parallel for a year. Your 2025 to 2026 Self Assessment return is still due by 31 January 2027 through the existing system, even while quarterly updates for 2026 to 2027 are running.
Key takeaways
- MTD for Income Tax is mandatory from 6 April 2026 if your 2024 to 2025 qualifying income was over £50,000, falling to over £30,000 from April 2027 and over £20,000 from April 2028.
- Qualifying income is gross self-employment plus property income, before expenses. Profit is irrelevant to the test.
- Quarterly updates are due 7 August, 7 November, 7 February and 7 May, are cumulative, and are not tax returns. The tax return and payment stay at 31 January.
- You need recognised software to keep digital records, send updates and file. Spreadsheets work only with bridging software and intact digital links.
- HMRC will not apply penalty points for late quarterly updates in 2026 to 2027, but you cannot file your return until the updates are in.
- Sign up yourself before HMRC signs you up: you keep the choice of software and control of your details.
Frequently asked questions
Do I still file a tax return under Making Tax Digital for Income Tax?
Yes. You send four quarterly updates during the year, then submit a tax return through your MTD software by 31 January after the tax year ends, adding any other income, reliefs and adjustments. That return replaces the old online Self Assessment filing, and 31 January remains the payment deadline.
What counts as qualifying income for the £50,000 threshold?
Qualifying income is your gross income from self-employment and UK property combined, before expenses, allowances or tax. PAYE salary, pensions, dividends and savings interest do not count. A sole trader with £58,400 turnover and £40,200 profit is in scope, because the test uses the £58,400.
Can I keep using a spreadsheet for MTD?
Yes, if the spreadsheet holds your digital records and is connected to HMRC through recognised bridging software. The link must be digital: you cannot retype totals into a filing screen by hand. Many sole traders find full MTD software simpler once invoice volume grows.
What happens if I miss a quarterly update deadline in 2026 to 2027?
HMRC has said penalty points will not apply for late quarterly updates during the 2026 to 2027 tax year. You still need to send the update, because your MTD tax return cannot be submitted until your quarterly updates are complete, and penalties still apply to a late tax return or late payment.
I earn between £30,000 and £50,000. When do I start, and should I join early?
You must use MTD from 6 April 2027 if your 2025 to 2026 qualifying income was over £30,000. Joining early is voluntary and worth considering: you get a practice run at quarterly reporting, time to choose software calmly, and your details are checked before the mandate starts.
Do quarterly updates mean I pay tax four times a year?
No. Quarterly updates are summaries of income and expenses, not tax returns, and no payment is due with them. You still pay your tax bill, including any payments on account, around the usual dates, with the balancing payment due by 31 January after the tax year ends.
This guide is for general information only and is not financial, tax or legal advice. If your situation is complex, for example multiple businesses or property income, speak to a qualified accountant before your start date.