Making Tax Digital for Income Tax, explained simply
Making Tax Digital for Income Tax (MTD for IT) becomes mandatory from 6 April 2026 for sole traders and landlords whose qualifying income was over £50,000 in the 2024/25 tax year. Instead of filing one annual Self Assessment return, you’ll keep digital records and send HMRC a summary of your income and expenses four times a year, followed by a final declaration. This guide explains exactly who is affected, what you must do, and the simplest way to stay compliant.
What is Making Tax Digital?
Making Tax Digital is HMRC’s programme to move the UK tax system online. The goal is fewer errors and more up-to-date records by replacing the once-a-year tax return with regular digital updates kept in compatible software. MTD for VAT has been in place for several years; MTD for Income Tax is the next major phase, and it affects far more people. You can confirm your own start date using HMRC’s official eligibility checker on GOV.UK.
Who has to comply, and when?
MTD for Income Tax is being phased in based on your qualifying income, your gross income (before expenses) from self-employment and property, added together:
- From 6 April 2026: sole traders and landlords with qualifying income over £50,000.
- From 6 April 2027: the threshold drops to £30,000.
- From 6 April 2028: the threshold drops to £20,000.
The thresholds and phasing are set out in HMRC’s MTD for Income Tax policy paper.
Important: if you are both a sole trader and a landlord, you add the two income figures together to check whether you cross the threshold. A sole trader who is also a landlord will file separate updates for each business. For a deeper look at who qualifies, see our guide to MTD for sole traders. As for Landlords, they have specific rules related to them, read MTD for landlords for the detail.
Still not sure if the rules apply to you? Use our 60-second eligibility check and see if and how MTD applies to your specific case.
How the threshold is tested: HMRC looks at the qualifying income on your 2024/25 Self Assessment return (the one due by 31 January 2026) to decide whether you’re in from April 2026. Qualifying income is gross income (before expenses) from self-employment and property combined. It excludes employment (PAYE) income, dividends and savings interest. If your reference period is shorter than 12 months, the figure is adjusted proportionately. Some people are exempt, for example, those who are digitally excluded, and non-residents who filed the SA109 page have a separate easement.
The threshold is based on qualifying income; we explain exactly what counts as qualifying income in a separate guide.
Quick check: am I affected from April 2026?
Add your gross self-employment income and your gross rental income for the 2024/25 tax year. If the total is more than £50,000, you must use MTD-compatible software from 6 April 2026.
What does MTD actually require you to do?
There are three obligations under MTD for Income Tax:
- Keep digital records. Record your income and expenses digitally using compatible software. Paper records and manual spreadsheets on their own no longer meet the rules.
- Send quarterly updates. Submit a summary of your income and expenses to HMRC four times a year through your software.
- Submit a final declaration. After the tax year ends, confirm your total income and finalise your tax position by 31 January, done through your MTD software, not the old HMRC online form.
What are the deadlines for quarterly updates?
Quarterly periods follow the tax year. The standard quarters cover 6 April – 5 July, 6 July – 5 October, 6 October – 5 January, and 6 January – 5 April. Each quarterly update is due by the 7th of the second month after the quarter ends. For 2026/27 that means:
| Quarter (standard) | Period | Deadline |
| Q1 | 6 Apr – 5 Jul 2026 | 7 Aug 2026 |
| Q2 | 6 Jul – 5 Oct 2026 | 7 Nov 2026 |
| Q3 | 6 Oct 2026 – 5 Jan 2027 | 7 Feb 2027 |
| Q4 | 6 Jan – 5 Apr 2027 | 7 May 2027 |
| Final declaration | Whole year 2026/27 | 31 Jan 2028 |
What happens if I miss a submission?
HMRC is introducing an MTD points-based penalty system. You receive a penalty point for each late submission, and once you reach four points a £200 penalty applies. For those joining in April 2026, HMRC won’t issue penalty points for late quarterly updates in the first year (2026/27), but you must still submit them, and first-year penalty exposure begins with the final declaration due 31 January 2028. The points-based system applies to quarterly updates from 2027/28. The practical takeaway is unchanged: late bookkeeping gets expensive under MTD, so a system that keeps records current automatically is worth far more than it used to be.worth far more than it used to be.
Do I need special software?
Yes. From your start date you must use MTD-compatible software that can keep digital records and send quarterly updates directly to HMRC. HMRC publishes a list of recognised software. When choosing, look for: automatic bank import, automatic categorisation of transactions, a real-time tax estimate, quarterly submission and final declaration in one place, and an interface you’ll actually keep up with.
How CleanBooksAI makes MTD effortless
CleanBooksAI is an AI-native, MTD-ready platform built for people who aren’t accountants. It imports your transactions through open banking, categorises them automatically with the Keeva AI assistant, keeps a real-time tax estimate, and files your quarterly updates and final declaration directly to HMRC, all explained in plain English. Because your books stay current in the background, each quarterly deadline becomes a quick review rather than a scramble. You can start free and stay compliant from day one. Once you’re signed up, here’s our walkthrough of quarterly updates to HMRC.
