Making Tax Digital for Income Tax explained
Making Tax Digital (MTD) for Income Tax changes how UK sole traders and landlords do Self Assessment. You keep digital records, send a summary to HMRC every quarter and file your tax return through software. Here is the whole thing on one page, checked against GOV.UK.
Not tax advice. This site explains GOV.UK guidance in plain English. Your own position depends on your tax returns and circumstances. Check GOV.UK or ask an accountant before you act.
What it is
Instead of one tax return a year from paper or memory, you keep digital records of your self-employment and property income and expenses in HMRC-recognised software. Every 3 months the software sends a summary (a quarterly update). After the tax year you submit your tax return through the software by 31 January. Source: GOV.UK: using MTD for Income Tax for the first time.
HMRC said over 436,000 sole traders and landlords sent their first quarterly update, and over 570,000 had signed up (HMRC news, 12 August 2026). Source: GOV.UK news.
Who needs it and when
| Qualifying income | In tax year | MTD from |
|---|---|---|
| Over £50,000 | 2024 to 2025 | 6 April 2026 |
| Over £30,000 | 2025 to 2026 | 6 April 2027 |
| Over £20,000 | 2026 to 2027 | 6 April 2028 |
It applies if you are registered for Self Assessment and get self-employment and/or property income. Partnerships do not need it yet. Source: GOV.UK: find out if and when you need MTD. Check your start date.
Qualifying income is turnover, not profit
Add your self-employment and property income before expenses (your share of any jointly owned property). Wages, dividends, pensions and partnership profit do not count. GOV.UK's example: £25,000 rent plus £27,000 self-employment is £52,000. Source: GOV.UK: work out your qualifying income.
Quarterly updates and deadlines
Updates are due on 7 August, 7 November, 7 February and 7 May. Each one is a running total for the tax year so far, and you must send one even if you had no income. The tax return and your tax bill are due by 31 January after the tax year. Source: GOV.UK: send quarterly updates. Use the quarterly deadlines calculator.
What software has to do
Your software (or a combination of products) must create and store digital records, send quarterly updates and submit your tax return. It can create records itself, or be bridging software that connects to spreadsheet records. HMRC does not recommend any product. Source: GOV.UK: choose the right software.
Compare all 163 products on HMRC's list: landlord software, sole trader software, free versions and bridging for spreadsheets.
Penalties
There are no penalty points for late quarterly updates in the 2026 to 2027 tax year. Points still apply to late tax returns. From 2027 to 2028, each missed deadline earns a point; at 4 points you get a £200 penalty, and another £200 for each further miss. Source: GOV.UK: penalties for MTD for Income Tax. More in MTD penalties.
Exemptions
You are automatically exempt if your qualifying income is £20,000 or less, and you can apply for an exemption if you are digitally excluded, meaning it is not reasonable for you to use compatible software. Source: GOV.UK: exemptions. More in MTD exemptions.
Questions
Is Making Tax Digital for Income Tax compulsory?
Yes, for sole traders and landlords registered for Self Assessment whose qualifying income is over the threshold, unless they are exempt.
When does MTD for Income Tax start?
6 April 2026 if qualifying income was over £50,000 in 2024 to 2025; 6 April 2027 if over £30,000 in 2025 to 2026; 6 April 2028 if over £20,000 in 2026 to 2027.
Do partnerships need it?
Not yet. GOV.UK says partnerships will need to use it at a later date.
Can I use a spreadsheet?
Yes, if you link it to HMRC-recognised bridging software. You cannot copy and paste figures into the software.
Will HMRC sign me up?
From September 2026 HMRC is signing up, in stages, people who should be using MTD for 2026 to 2027 but have not. If you do not get a letter it is still your responsibility to check. Source: GOV.UK.