Making Tax Digital (2026): Who Must Join, Deadlines and How It Works

Making Tax Digital (MTD) is HMRC's move from once-a-year paperwork to digital records and software filing. VAT-registered businesses have lived with it for years. Since 6 April 2026 it has also covered the Income Tax of sole traders and landlords with qualifying income over £50,000, and that net widens each April until 2028. This guide is for the self-employed, landlords and small VAT-registered firms: whether you're in, when, what you send and when, how to choose software, who's exempt, and what the new penalty points cost. Figures are checked against GOV.UK as of October 2026.

Quick answer

Making Tax Digital for Income Tax applies if you're a sole trader or landlord whose self-employment and property income, before expenses, is over £50,000 (from 6 April 2026), £30,000 (from 6 April 2027) or £20,000 (from 6 April 2028). You keep digital records, send four quarterly updates through compatible software and still file a tax return by 31 January.

• Quarterly update deadlines: 7 August, 7 November, 7 February and 7 May

• No penalty points for late quarterly updates in 2026-27, but late returns still earn points

• Reach 4 points points and you pay £200, then £200 for each further late submission

• All VAT-registered businesses have been in MTD for VAT since April 2022

What is Making Tax Digital?

Making Tax Digital is a set of rules that make businesses keep their tax records in software and send figures to HMRC straight from that software, through HMRC's API. It runs as two separate regimes:

• MTD for VAT: every VAT-registered business. Mandatory above the registration threshold from April 2019 and for all VAT-registered businesses, whatever their turnover, from April 2022.
• MTD for Income Tax: individuals with self-employment or property income. Mandatory in stages from 6 April 2026.

In practice that means software instead of paper or HMRC's old online return, and four short submissions a year on top of the annual return.

Who has to use Making Tax Digital for Income Tax?

You must use it if all of these apply:

• you're a sole trader or landlord registered for Self Assessment;
• you get income from self-employment, property, or both;
• your qualifying income is over the threshold for the relevant tax year.

The test looks back two years. HMRC checks the return you've already filed, writes to people over the limit, and expects them to start the following April. If you don't get a letter, it's still your job to check.

The MTD for Income Tax rollout

6 April 2026

Qualifying income over £50,000 on the 2024-25 return

September 2026

HMRC starts signing up people who should be in for 2026-27 but haven't joined

6 April 2027

Qualifying income over £30,000 on the 2025-26 return

6 April 2028

Qualifying income over £20,000 on the 2026-27 return

Date not set

Partnerships — HMRC will publish a timeline later

What counts as qualifying income

Qualifying income is your gross self-employment and property income added together: turnover, not profit. Expenses are ignored for this test. These don't count: PAYE wages, your share of a partnership's profit, dividends (including from your own company), the State Pension and private pensions, savings interest, and income from UK REITs.

A few details catch people out:

• Joint property: only your share counts. A jointly owned let earning £50,000, split equally, gives you £25,000.
• New sole traders: HMRC annualises a short first year. Six months' trading at £20,000 is treated as £40,000. Landlords must annualise their own figures.
• VAT-registered cash basis traders can include or exclude VAT in turnover. If you include it, it counts towards the test.
• Ceased sources still count if you have another continuing self-employment or property income source.

Worked example. Dan is a plumber with £32,000 turnover and lets a flat for £14,400 a year. His 2024-25 qualifying income was £46,400, under £50,000, so he wasn't in from April 2026. If his 2025-26 return shows a similar £46,400, that's over £30,000, so he must start on 6 April 2027. His profit after expenses is irrelevant.

Once you're in, you can only opt out if your qualifying income falls below the threshold for three tax years in a row.

Quarterly updates and deadlines

Every three months your software adds up your digital records into totals for each income and expense category, and you send that summary to HMRC. Each update is cumulative. It covers the start of the tax year to the end of the period, so you can fix earlier mistakes without resending old updates. You must send one even if nothing happened in the quarter.

Calendar periods suit accounts that run to 31 March; choose them before your first update, as you can't switch mid-year. You can send an update up to 10 days before the period ends if nothing more will come in.

In the first year, the next deadline is 7 November 2026 for the period to 5 October. Each quarterly update gives you an estimate of your tax bill in your software or HMRC online account. It isn't a bill, but it's useful for setting money aside.

The annual tax return under MTD

The quarterly updates don't replace the year-end return. After the fourth update you make any accounting adjustments, such as capital allowances, private-use add-backs and the like. Then you complete and submit your tax return through the MTD software by 31 January after the tax year. In HMRC's earlier guidance this step was called the "final declaration".

HMRC pre-fills what it already knows: PAYE pay, pensions, taxable state benefits, CIS deductions, student loan plan type and Marriage Allowance. You add the rest yourself: savings interest, dividends, partnership profit share and any other gains. You must check all of it before you declare it correct.

Two things don't change: when you pay (31 January, plus 31 July if you make payments on account) and how tax is worked out. The year before you join, you still file the old way. So if you started MTD in April 2026, your 2025-26 return due 31 January 2027 is a normal Self Assessment return. You can amend an MTD return in your software within 12 months of the filing deadline.

Software: what you need

HMRC doesn't supply its own MTD for Income Tax software. You use a commercial product it has recognised. Two broad types exist:

• Record-keeping software: you create records by linking a business bank account, scanning receipts or typing entries. Most of these products send quarterly updates and file the return.
• Bridging software: connects to records you keep elsewhere, usually a spreadsheet, and makes the submissions for you.

Check before you buy or subscribe

0/7

• It supports every income source you have (each trade and each UK or foreign property business)
• It sends quarterly updates AND submits the full tax return, or you have a second product that does
• It lets you report other income: savings, dividends, pensions, partnership profit
• It handles your update periods (standard tax year or calendar quarters)
• If you're VAT-registered, it also covers MTD for VAT, or works alongside your VAT software
• It allows your agent access, if you use one
• Free plans: check transaction limits before you rely on one

Share Print

You can use one product per business, but only one product for each separate submission. HMRC's software finder on GOV.UK lists only recognised products; HMRC doesn't recommend any one of them.

How to sign up

Joining MTD for Income Tax

1. 1

   Check your qualifying income and exemptions

   Add your gross self-employment and property income from the relevant return. Use HMRC's checker to see if and when you need to start, and whether an exemption applies.

   Check if you need to use MTD
2. 2

   Choose compatible software

   Pick software before signing up, so you can authorise it straight away.

3. 3

   Sign up with your Self Assessment login

   Use the same Government Gateway user ID as for Self Assessment. You must be registered for Self Assessment and have filed a return in the last two years. You may need to prove your identity with a passport or driving licence.

   Sign up for MTD for Income Tax
4. 4

   Confirm each income source

   Sole traders need the trading name, business address and type of trade. Add any business or property source that's missing, and any that has stopped.

5. 5

   Keep records and send the first update

   Record every transaction digitally from your start date, then send the first quarterly update by 7 August (or the next deadline if you join part-way through).

   Tip: Joining late in the year? Your software sends the missed quarters as one cumulative update.

From September 2026 HMRC started signing up anyone who should be in MTD for 2026-27 but hadn't joined, using the data it already holds. If that's you, check the income sources it has recorded. Signing yourself up lets you get them right from the start. Agents use a separate client sign-up service. You can also volunteer a year early to get used to it.

Who is exempt?

If you're exempt, you keep filing an ordinary Self Assessment return. Some exemptions are automatic:

• qualifying income of £20,000 or less;
• no National Insurance number before the start of the tax year;
• partnerships (for now), trusts, non-resident companies and personal representatives;
• people who declared on their 2024-25 return that they couldn't provide information to HMRC and have a power of attorney or deputy in place;
• until at least April 2027: those whose 2024-25 return included an averaging relief claim on SA103, qualifying care relief (foster and kinship carers), the SA107 trusts page or the SA109 residence page;
• for longer: ministers of religion (SA102M), Lloyd's members, and people claiming Married Couple's or Blind Person's Allowance.

Others you apply for, mainly digital exclusion. That means age, health or disability stops you using a computer, tablet or phone; you can't get internet access at home, at work or anywhere suitable; or your religious beliefs rule out digital records. HMRC won't accept "I've always filed on paper", "I don't know accounting software", "I have few transactions" or the cost of software on its own. If you're already exempt from MTD for VAT as digitally excluded, contact HMRC's Self Assessment helpline rather than reapplying. See our HMRC phone numbers guide.

Penalties: the new points system

MTD comes with new penalties that replace the old £100-and-daily regime for your personal return from the year you join.

Late submission and late payment under MTD for Income Tax

	2026-27 tax year	2027-28 onwards
Late quarterly update	No point (but must be sent before the return)	1 point per deadline
Late tax return	1 point	1 point
Points threshold	4 points (2 points for volunteers)	4 points
At threshold	£200, then £200 per later miss	Same
Paid 16–30 days late	3% of tax owed at day 15	4% of tax owed at day 15
Paid 31+ days late	3% at day 15 + 3% at day 30 + 10% a year	4% + 4% + 10% a year

Late quarterly update

2026-27 tax year

No point (but must be sent before the return)

2027-28 onwards

1 point per deadline

Late tax return

2026-27 tax year

1 point

2027-28 onwards

1 point

Points threshold

2026-27 tax year

4 points (2 points for volunteers)

2027-28 onwards

4 points

At threshold

2026-27 tax year

£200, then £200 per later miss

2027-28 onwards

Same

Paid 16–30 days late

2026-27 tax year

3% of tax owed at day 15

2027-28 onwards

4% of tax owed at day 15

Paid 31+ days late

2026-27 tax year

3% at day 15 + 3% at day 30 + 10% a year

2027-28 onwards

4% + 4% + 10% a year

You get only one point per deadline, even if you run several businesses and miss several updates for the same quarter. Below the threshold, each point expires 24 months after the missed deadline. Once you hit the threshold, all points are cleared only after 12 months of on-time filing and catching up on anything outstanding from the previous 24 months.

On late payment, your first year of the new rules gives you 30 days to pay or agree a payment plan before any penalty. After that it's 15 days. Payments on account are outside these penalties, but late payment interest at Bank of England base rate plus 4% runs on everything from day one.

Worked example (2027-28 rules). Aisha owes a £6,000 balancing payment and pays it 51 days late. First penalty: 4% of £6,000 at day 15 (£240) plus 4% at day 30 (£240) = £480. Second penalty: 10% a year on £6,000 for 21 days (day 31 to day 51) = £6,000 × 10% × 21 ÷ 365 = £34.52. That's £514.52 in penalties, plus interest. Setting up a payment plan with HMRC before day 15 would have stopped the penalties.

Note that from April 2027 HMRC says the new penalties apply to everyone filing a personal Self Assessment return, not just those in MTD. Exempt filers will have a 2-point threshold.

Making Tax Digital for VAT

If you're VAT-registered, you're already in MTD. HMRC says all VAT-registered businesses should now be signed up, so you no longer need to sign up yourself. You must:

• keep your VAT records digitally in functional compatible software;
• move data between programs only by digital links: linked spreadsheet cells, CSV/XML imports, API transfers. Copy-and-paste doesn't count;
• file each VAT return from that software through HMRC's API.

VAT returns are usually due one month and seven days after each quarter. Late VAT returns earn points with a threshold set by how often you file: 2 for annual, 4 points for quarterly, 5 for monthly. At the threshold you pay £200 for each further late return. Late VAT payments cost 3% at day 15, another 3% at day 30, then 10% a year. VAT and Income Tax points are counted separately. A VAT-registered sole trader can rack up points in both, which is a good reason to pick one product that handles both. Our VAT registration guide covers the £90,000 threshold, and the VAT calculator does the 20% sums.

VAT exemptions (digital exclusion, religious objection or insolvency) are claimed through HMRC's VAT general enquiries line.

Common mistakes

• Testing profit instead of turnover. A landlord with £35,000 of rent and £20,000 of costs is over £30,000.
• Forgetting the lag. The threshold is tested on the return two years before. Your 2025-26 return, due by 31 January 2027, decides April 2027.
• Treating 2026-27 as penalty-free. Late quarterly updates don't earn points this year. Late returns and late payments still cost money.
• Thinking MTD changes your tax bill. It changes the reporting, not the rates. To estimate what you'll owe, see how self-employed tax is calculated.

Official links

• Find out if and when you need to use MTD for Income TaxThresholds and HMRC's checker
• Work out your qualifying incomeWhat's in and out of the test
• Choose the right softwareSoftware types and HMRC's finder
• Sign up for MTD for Income TaxSole traders and landlords
• Send quarterly updatesUpdate periods and deadlines
• Penalties for MTD for Income TaxPoints and late payment penalties
• Exemptions from MTD for Income TaxAutomatic and applied-for exemptions
• VAT Notice 700/22: Making Tax Digital for VATDigital records and digital links rules

What to do next

Add up last year's gross self-employment and property income now. If it's over £30,000, you have until April 2027 to pick software and practise. Volunteering a year early, when late quarterly updates carry no points, is the cheapest way to learn. Clean, numbered invoices from our invoice generator make digital record-keeping easier, and the budget planner helps you put tax aside each quarter. For the full annual return, read our Self Assessment guide.

This is general information, not legal or tax advice — confirm on the official source or with a professional.

Frequently asked questions

When does Making Tax Digital for Income Tax start?

It started on 6 April 2026 for sole traders and landlords whose qualifying income was over £50,000 on their 2024-25 tax return. It extends to those over £30,000 (based on 2025-26) from 6 April 2027, and over £20,000 (based on 2026-27) from 6 April 2028. Partnerships will join later on a date HMRC hasn't yet set.

What counts as qualifying income for Making Tax Digital?

Your gross self-employment and property income added together, before expenses, as shown on the tax return for the relevant earlier year. Wages, pensions, dividends, savings interest and your share of partnership profit don't count. So a £27,000 turnover business plus £25,000 of rent gives £52,000 of qualifying income, even if your profit is much lower.

Do I still need to do a Self Assessment tax return under MTD?

Yes. The quarterly updates are only running totals of income and expenses. After the year ends you still submit a tax return, now through your MTD software, by 31 January, adding other income such as savings interest and dividends. Payment dates don't change: 31 January, and 31 July if you make payments on account.

What happens if I miss a Making Tax Digital quarterly update?

For the 2026-27 tax year HMRC won't give penalty points for late quarterly updates, but you must send them before you can file your return. From 2027-28 each missed deadline earns one point; at 4 points you pay £200, and another £200 for each further late submission until you clear the points.

Is there free software for Making Tax Digital?

HMRC doesn't provide its own MTD for Income Tax software, but some recognised commercial products are free for people with simple affairs, often with limits such as a cap on transactions. Use HMRC's software finder on GOV.UK to filter by your income types and check that the product can also file your full tax return.

Does Making Tax Digital apply to limited companies?

MTD for Income Tax covers individuals: sole traders and landlords. A limited company pays Corporation Tax, which isn't part of it. But a VAT-registered company has been inside Making Tax Digital for VAT since April 2019 or April 2022, so it already keeps digital VAT records and files VAT returns through compatible software.

Sources & verification

Figures on this page were checked against the sources below when it was last reviewed on 7 October 2026. Each rate and limit is stored once with its own official source and review date, and official update channels are monitored daily so changes are picked up. How we verify

1. 1.Find out if and when you need to use Making Tax Digital for Income Tax — HMRC / GOV.UK · accessed 7 October 2026
2. 2.Work out your qualifying income for Making Tax Digital for Income Tax — HMRC / GOV.UK · accessed 7 October 2026
3. 3.Use Making Tax Digital for Income Tax: send quarterly updates — HMRC / GOV.UK · accessed 7 October 2026
4. 4.Use Making Tax Digital for Income Tax: submit your tax return — HMRC / GOV.UK · accessed 7 October 2026
5. 5.Penalties for Making Tax Digital for Income Tax — HMRC / GOV.UK · accessed 7 October 2026
6. 6.Sign up for Making Tax Digital for Income Tax — HMRC / GOV.UK · accessed 7 October 2026
7. 7.Choose the right software for Making Tax Digital for Income Tax — HMRC / GOV.UK · accessed 7 October 2026
8. 8.Find out if you can get an exemption from Making Tax Digital for Income Tax — HMRC / GOV.UK · accessed 7 October 2026
9. 9.VAT Notice 700/22: Making Tax Digital for VAT — HMRC · accessed 7 October 2026
10. 10.Extension of Making Tax Digital for VAT — HMRC · accessed 7 October 2026
11. 11.Penalty points and penalties if you submit your VAT Return late — HMRC / GOV.UK · accessed 7 October 2026
12. 12.How late payment penalties work if you pay VAT late — HMRC / GOV.UK · accessed 7 October 2026