Making Tax Digital for Income Tax Self Assessment (MTD for Income Tax) is the biggest change to the way self-employed people and landlords report their income in decades. Since 6 April 2026, many sole traders and landlords have had to keep digital records and send quarterly updates to HMRC using compatible software. If you are not sure whether it applies to you, or what you need to do next, this guide explains the essentials.
Who has to use MTD for Income Tax?
MTD for Income Tax is being introduced in stages, based on your qualifying income. This is your total gross income (turnover, before expenses) from self-employment and property combined.
- From 6 April 2026: qualifying income over £50,000
- From 6 April 2027: qualifying income over £30,000
- From 6 April 2028: qualifying income over £20,000
HMRC uses the figures on your Self Assessment tax return from an earlier tax year to decide when you must join. For example, the 2024/25 return determined who joined in April 2026. If your qualifying income is close to a threshold, it is worth checking your position now.
Qualifying income is based on gross income, not profit. A landlord with £35,000 of rent and a part-time business turning over £20,000 has qualifying income of £55,000, even if their profits are much lower.
What changes under MTD?
Instead of filing one annual tax return, you will:
- Keep digital records of your business and property income and expenses using MTD-compatible software.
- Send quarterly updates to HMRC summarising your income and expenses.
- Submit a final declaration by 31 January after the end of the tax year, confirming your total income and claiming any reliefs. This replaces the traditional Self Assessment return.
Quarterly update deadlines
The standard quarterly periods follow the tax year, and each update is due by the 7th of the month following the end of the quarter:
- Quarter to 5 July: due 7 August
- Quarter to 5 October: due 7 November
- Quarter to 5 January: due 7 February
- Quarter to 5 April: due 7 May
If you joined MTD in April 2026, your second quarterly update for the period to 5 October 2026 is due by 7 November 2026.
Penalties under the new regime
HMRC has introduced a points-based system for late submissions. Each missed quarterly update or late final declaration earns a penalty point, and once you reach the threshold a financial penalty applies. Late payment penalties and interest also apply if tax is paid late. Keeping on top of your records throughout the year is the best way to avoid them.
How to get ready
- Check your qualifying income on your most recent tax returns.
- Choose MTD-compatible software. Many cloud accounting packages are recognised by HMRC.
- Go digital now. Scan receipts, connect bank feeds and stop relying on paper records.
- Set reminders for each quarterly deadline, or let your accountant manage them for you.
- Authorise an agent. Your accountant can submit updates on your behalf.
How Financial United can help
We help sole traders and landlords across Shrewsbury, the Midlands and the wider UK prepare for MTD. We can set up and train you on the right software, keep your bookkeeping up to date, send your quarterly updates and complete your final declaration, so you stay compliant without the stress.
M Khalid Jamil, FAIA, AFA, FCMA
Director of Financial United LTD with over 20 years of experience in accounts, finance and corporate banking. View profile
This article is for general information only and does not constitute professional advice. Tax rules change and your circumstances may differ, so please contact us for advice tailored to you.
