Updated October 2026. Facts are taken from HMRC guidance on GOV.UK.
Making Tax Digital (MTD) for Income Tax became mandatory on 6 April 2026. It changes how sole traders and landlords keep records and report to HMRC: digital records, quarterly updates through software, and a tax return filed through that software after the year end.
Who needs to use it, and when?
It applies to sole traders and landlords registered for Self Assessment, based on their qualifying income on an earlier tax return (HMRC):
| Qualifying income on your… | Threshold | You must use MTD from |
|---|---|---|
| 2024/25 tax return | Over £50,000 | 6 April 2026 |
| 2025/26 tax return | Over £30,000 | 6 April 2027 |
| 2026/27 tax return | Over £20,000 | 6 April 2028 |
Partnerships do not need to use MTD for Income Tax yet. HMRC will set out a timeline later.
What counts as qualifying income?
Your total self-employment and property income before expenses: turnover, not profit. Income from more than one business is added together. Employment income, your share of partnership profits, dividends and pensions do not count. For jointly owned property, only your share counts (HMRC: work out your qualifying income).
What you have to do
- Keep digital records of your self-employment and property income and expenses in compatible software, such as Xero or FreeAgent. Spreadsheets can be used with bridging software.
- Send quarterly updates: summaries of income and expenses, covering the tax year to date.
- Submit your tax return through your software by 31 January after the tax year ends, adding any other income and claiming reliefs.
Quarterly update deadlines
| Standard 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 |
You can choose calendar quarters instead (1 April to 30 June and so on), with the same deadlines. See HMRC’s guide to sending quarterly updates.
Penalties
MTD users are under a points-based system for late submissions: one point per missed deadline, and a £200 penalty once you reach 4 points. HMRC has confirmed that no penalty points will be issued for late quarterly updates in 2026/27, but the updates must still be sent, and late tax return and late payment penalties still apply. See penalties for MTD for Income Tax.
Exemptions
Some people are exempt automatically, including those with qualifying income of £20,000 or less. You can also apply for an exemption if you are digitally excluded, for example because of age, health or disability, or because you have no internet access and no reasonable alternative. See HMRC’s exemption guidance.
Video: what is MTD for Income Tax?
Video from FreeAgent. Check HMRC guidance for the latest dates and thresholds.
How Taxlab can help
As a Xero Silver Partner and FreeAgent Certified Practitioner, we can choose and set up your software, keep your digital records, send your quarterly updates and file your tax return. See also our Self Assessment service and our latest update, MTD for Income Tax: where things stand in October 2026.
Further information
- Use Making Tax Digital for Income Tax (GOV.UK)
- MTD for Income Tax: deadlines, steps and how to prepare (Xero)
- Quarterly updates for MTD for Income Tax (Xero)
- What is Making Tax Digital? (FreeAgent)
Contact us, call 0845 862 6009 or message us on WhatsApp.
This page gives general information only and does not constitute professional advice.