Making Tax Digital for Income Tax is no longer something to prepare for. It went live on 6 April 2026 for sole traders and landlords who reported qualifying income above £50,000 on their 2024/25 tax return, and the first quarterly update is due by 7 August 2026.
If that's you, the clock is already running on your first submission. If your income sits below the threshold, your turn is coming sooner than you might think.
This guide covers who's caught by MTD, what the new reporting rhythm looks like, the deadlines you need to pin to the wall, and the mistakes we're already seeing people make in the first few months.
Who Has to Use MTD for Income Tax, and When
The rollout happens in three waves, based on something HMRC calls "qualifying income." Qualifying income is your gross turnover from self-employment and UK or foreign property combined, before any expenses, allowances, or deductions. Employment income, pensions, dividends, interest, and capital gains don't count.
The word gross is the one that trips people up, especially landlords. If you earn £55,000 from self-employment but spend £20,000 on business costs, your qualifying income is still £55,000, so you fall into the April 2026 group. A landlord whose rental income looks modest after mortgage interest and repairs can easily sit above the threshold on gross figures. The same combining rule applies across income types: a small business earning £35,000 plus £20,000 in rent gives a combined qualifying income of £55,000, which puts you in the first wave. Working out where you stand is exactly the kind of question our tax accountants in the UK answer for clients every week, and it's worth settling before a deadline forces the issue.
The three phases:
- April 2026 – qualifying income over £50,000
- April 2027 – the threshold drops to £30,000
- April 2028 – it drops again to £20,000
HMRC reviewed 2024/25 tax returns filed by the 31 January 2026 deadline to identify who is mandated from April 2026, and wrote to those affected. One warning here: not receiving a letter doesn't mean you're exempt. The duty to check and comply rests with you. If you're anywhere near a threshold, check your gross figures now rather than assuming HMRC will chase you.
Limited companies are out of scope entirely. HMRC has confirmed MTD will not be extended to corporation tax, so this is a sole trader and landlord issue.
What Actually Changes: From One Return to Five Submissions
Under the old system, you kept records however you liked and filed one Self Assessment return each January. Under MTD, three things change.
Digital records become mandatory. Income and expenses must be recorded in MTD-compatible software, whether that's a full accounting package like Xero or QuickBooks, or bridging software that connects your existing spreadsheets to HMRC's systems. Paper ledgers and a shoebox of receipts no longer satisfy the rules.
You report quarterly. Four times a year you send HMRC a summary of your income and expenses. These updates aren't full tax returns and they don't trigger a tax payment; they're running summaries pulled from your digital records. If you have both self-employment and property income, each source needs its own separate quarterly update, so a landlord who also freelances is filing eight updates a year, not four.
A final declaration replaces the annual return. After the fourth quarter, you confirm the full-year figures, add any other income like dividends or interest, apply reliefs and adjustments, and submit. Your first MTD final declaration, covering 2026/27, is due by 31 January 2028.
One thing that hasn't changed: payment dates. MTD changes how and how often you report, not when you pay. The 31 January and 31 July payment dates remain the same as under Self Assessment. Quarterly updates create no payment obligation on their own.
The 2026/27 Deadlines
For anyone mandated from April 2026, the reporting calendar for this tax year looks like this:
- Q1 (6 April – 5 July): due by 7 August 2026
- Q2 (6 July – 5 October): due by 7 November 2026
- Q3 (6 October – 5 January): due by 7 February 2027
- Q4 (6 January – 5 April): due by 7 May 2027
- Final declaration for 2026/27: 31 January 2028
You can elect to use calendar quarters instead (April–June, July–September and so on) if that matches your bookkeeping better, but the election has to be made through your software before your first update and can't be changed mid-year. The filing deadlines stay the same either way.
And don't forget the old system isn't finished yet. Your 2025/26 Self Assessment return, the final one under the old rules, is still due by 31 January 2027, completely separate from your MTD obligations. For a while, you're running both.
Penalties: A Soft Start, But Not a Free Pass
MTD uses a points-based penalty system. Each missed quarterly deadline earns one penalty point, and at four points within 24 months HMRC issues a £200 penalty, with a further £200 for every late submission after that.
HMRC has applied a light touch for the first year of quarterly updates, but that leniency has limits. Even where no penalty point applies in 2026/27, you must still submit every quarterly update, because HMRC requires all four before you can make your final declaration. And the soft landing does not apply to the final declaration itself; a late 2026/27 return will still attract a penalty point. Treat the soft landing as room to iron out software problems, not as permission to ignore the deadlines.
Late payment penalties run separately, with interest from the due date, so the discipline of paying on time matters as much as it ever did.
Getting Set Up Properly
If you're in the April 2026 wave and haven't sorted your setup yet, the priority order is simple: confirm your qualifying income, choose and test compatible software, separate business and personal spending so your records are clean, and get your April-to-July figures in shape before the 7 August deadline. If you're in the 2027 or 2028 waves, this year is your practice run; moving to digital record-keeping early means your first mandatory quarter is routine instead of a scramble.
This is also the point where a lot of sole traders and landlords decide the admin isn't worth doing alone. If you've given an accountant permission, they can handle the quarterly updates and final declaration on your behalf. Our accounting and tax services cover digital record setup, software selection, and ongoing MTD submissions for both sole traders and landlords, so the deadlines stop being your problem.
The worst position to be in is finding out in August that you were supposed to file something in a system you've never logged into. If you're not sure where you stand, contact our tax advisers and we'll confirm your start date and map out what your reporting year looks like. Ten minutes of checking now is cheaper than a stack of penalty points later.
