Making Tax Digital (MTD) is just around the corner — here’s what you need to know to stay compliant and ready.

What is Making Tax Digital for Income Tax?

From 6 April 2026, sole traders and landlords with qualifying income over £50,000 (unless in one of the exclusion categories) must submit quarterly updates and an annual digital return to HMRC, replacing the annual Self‑Assessment returns. This is the second stage of the government’s Making Tax Digital (MTD) programme, following MTD for VAT which began in 2019.

The changes represent a fundamental shift from annual to quarterly reporting, requiring digital record‑keeping using compatible software to submit updates throughout the tax year.

When does it affect you?

  • 6 April 2026: income over £50,000 per year.
  • 6 April 2027: income over £30,000 per year.
  • 6 April 2028: income over £20,000 per year.

Qualifying income means total revenue/sales (not profit) from self‑employment and property combined, including your share of jointly owned property.

Making Tax Digital – What You Must Do

  • Registration
    HMRC will not register you automatically. If your income meets the threshold, DA Accountants can sign you up before the relevant date. HMRC began writing to affected taxpayers in spring 2025.
  • Keep digital records
    Maintain all business income and expenses digitally using MTD‑compatible software. HMRC maintains a list of approved providers. Assistance is available to select the most suitable software.
  • Submit quarterly updates
    • 6 April to 5 July – deadline 7 August.
    • 6 July to 5 October – deadline 7 November.
    • 6 October to 5 January – deadline 7 February.
    • 6 January to 5 April – deadline 7 May.
  • Complete annual digital tax return
    Submit final declaration by 31 January, replacing your annual Self‑Assessment return. Other income sources will also need to be reported on this return.
  • Penalties
    From 6 April 2027, MTD introduces a points‑based penalty system. You receive one point for each missed deadline. Once you reach the threshold of four points, you will face a £200 penalty, with further £200 penalties for subsequent late submissions. Late payment penalties also exist, with those late by over a month being charged up to 10% interest per annum on their tax bill.