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Guide

Making Tax Digital

Making Tax Digital (MTD) means keeping digital records and sending updates using compatible software. It already applies to VAT. For Income Tax it is being phased in for sole traders and landlords, using qualifying income: gross self-employment and property income before expenses.

Step by step

  1. 1Check whether your income is over the MTD threshold
  2. 2Choose HMRC-recognised software
  3. 3Keep digital records of income and expenses
  4. 4Send quarterly updates. If you joined MTD in April 2026, those dates are 7 November 2026, 7 February 2027 and 7 May 2027
  5. 5Late-submission points apply (4 points means a £200 penalty). No points for late quarterly updates in 2026/27, but every update must be in before the return
  6. 6Submit a final declaration after the tax year

Common questions

Who must use Making Tax Digital for Income Tax in 2026?

Sole traders and landlords with qualifying income over £50,000 from 6 April 2026, based on the 2024/25 return. VAT-registered businesses already keep digital VAT records.

What happens if a quarterly update is late in 2026/27?

Late-submission points apply, and 4 points means a £200 penalty. There are no points for a late quarterly update in 2026/27, but every update must be in before the return.

Common mistakes

  • Assuming spreadsheets alone are enough (you need bridging software)
  • Using qualifying income from the wrong year
  • Leaving software setup to the last minute

Related guides

Last checked against GOV.UK: 28 October 2026. Tax year 2026/27.

Not affiliated with HMRC. General information, not professional tax advice. Check GOV.UK or speak to a qualified adviser for your situation.