If you are a UK sole trader or landlord with more than £50,000 of qualifying income, Making Tax Digital for Income Tax begins for you from 6 April 2026.
That means the change is no longer something to prepare for in the distant future. You need to keep digital records, use compatible software and send quarterly updates to HMRC , whilst still completing the year-end process for your tax bill.
And the rules will reach more people soon. From 6 April 2027, MTD for Income Tax will apply to individuals with qualifying income above £30,000.
The good news? With the right cloud accounting system and a sensible routine, you can stay compliant without drowning in admin.
This guide explains what Making Tax Digital for Income Tax 2026 means for you, what you need to do now and how professional support can make the transition far more manageable.
This article reflects HMRC guidance available on 25 August 2026. Your circumstances may require tailored advice.
Making Tax Digital for Income Tax , often called MTD ITSA or MTD for Income Tax , is HMRC’s digital reporting system for sole traders and landlords.
It requires you to:
There is a common misconception that quarterly updates are four additional tax returns. They are not.
A quarterly update is a summary of your income and expenses for a three-month period. It gives HMRC an ongoing view of your figures, but it does not calculate your final tax liability on its own.
Your year-end finalisation remains crucial.
MTD ITSA applies if you are a sole trader or landlord registered for Self Assessment and your qualifying income is above the relevant threshold.
Qualifying income is your total gross income , before expenses , from:
For example, if you receive £35,000 from consultancy work and £18,000 from a rental property, your qualifying income is £53,000. You could therefore fall within the first MTD ITSA phase, even though neither income source is individually above £50,000.
However, employment income, dividends, pensions and savings interest do not count towards the qualifying income test.
| Qualifying income | MTD start date | Based on |
|---|---|---|
| More than £50,000 | 6 April 2026 | 2024/25 tax year |
| More than £30,000 | 6 April 2027 | 2025/26 tax year |
| More than £20,000 | 6 April 2028 | 2026/27 tax year |
The test is based on your gross qualifying income from the previous tax year. So, if your 2024/25 Self Assessment tax return shows qualifying income above £50,000, you should have started using MTD for Income Tax from 6 April 2026.
HMRC may write to you, but you remain responsible for checking whether the rules apply. You can use the HMRC eligibility guidance to check your position.
If you are in the first group affected, your responsibilities began on 6 April 2026.
You need to record your income and allowable expenses digitally. This includes maintaining accurate records for each relevant self-employment and your property income.
A spreadsheet may help you organise information, but it may not provide the complete functionality needed to meet MTD ITSA requirements. You need software that can retain digital records and submit the required information to HMRC , or compatible bridging software used correctly with your records.
The key is to avoid leaving everything until the end of the tax year. When your transactions are recorded consistently, your quarterly updates become a straightforward review rather than a frantic reconstruction exercise.
Your software must be capable of:
Cloud accounting software can be particularly useful because your records are available wherever you work. It can also connect to your bank, reduce manual data entry and highlight missing or unusual transactions.
At Price & Accountants, we regularly help businesses adopt practical cloud accounting systems, including Xero, so that compliance becomes part of the normal workflow rather than a separate administrative burden. You can learn more about our bookkeeping and accounting services.
You must submit a quarterly update for each self-employment and a separate update for your property income, where applicable.
For a standard tax-year reporting cycle, the 2026/27 deadlines are generally:
The first deadline has now passed. If you were required to use MTD ITSA from 6 April 2026 and have not yet submitted the first update, take action promptly rather than allowing the position to drift.
Quarterly updates are cumulative summaries. They are not your final tax calculation, and they do not necessarily tell you exactly how much tax you owe at that point.
Quarterly reporting does not remove the need to finalise your tax position.
At the end of the year, you generally need to complete:
An End of Period Statement, or EOPS, finalises the figures for each relevant business or property income source. It allows you to make the necessary adjustments and confirm the final taxable profit.
The Final Declaration brings together your income and reliefs for the tax year. It replaces the traditional Self Assessment tax return process for individuals within MTD ITSA, although the underlying tax calculation and payment obligations remain.
For the 2026/27 tax year, the final deadline is generally 31 January 2028.
You must also continue to pay any tax due by the relevant deadline. MTD does not change the importance of budgeting for your tax bill , it simply provides HMRC with information more regularly throughout the year.
HMRC has introduced a points-based penalty system for late submissions.
During the first MTD ITSA year , 2026/27 , HMRC has confirmed that penalty points will not be issued for late quarterly updates. This is a soft-landing period designed to give affected businesses time to adapt.
But this does not mean that every deadline is penalty-free.
Late year-end submissions and late tax payments can still result in penalties and interest under the usual rules. You should also treat the soft-landing period as preparation time, not permission to ignore your quarterly obligations.
From 6 April 2027, the points-based system is expected to apply to late MTD submissions. Generally, you receive a penalty point for each missed deadline. Once the relevant points threshold is reached, a financial penalty may be charged.
The safest approach is simple: maintain your records throughout the quarter and set reminders well before each submission date.
Some people may be exempt from MTD ITSA.
For example, HMRC may consider an exemption where it is not reasonably practicable for you to use digital tools because of your age, disability, health, religious beliefs or lack of reliable internet access.
However, being unfamiliar with accounting software, having a small number of transactions or finding the change inconvenient will not normally be enough by itself.
If you believe you are digitally excluded, read the HMRC guidance on MTD exemptions. If an exemption applies, you will still need to report your income through Self Assessment.
MTD ITSA can feel like another obligation competing for your attention. But the right system can turn it into a regular, controlled process.
Cloud accounting helps you:
The beauty of this approach is that it does more than satisfy HMRC. It gives you a clearer view of cash flow, profitability and upcoming tax liabilities.
That can mean fewer surprises, better decisions and more time to focus on your clients, tenants or next stage of growth.
If MTD for Income Tax applies to you, we encourage you to take these steps:
This is where the right support can make a pivotal difference.
At Price & Accountants, we help sole traders, landlords and growing businesses move to cloud accounting, organise their bookkeeping and stay on track with tax compliance. We can help you understand whether MTD ITSA applies, select an appropriate digital process and manage the reporting without drowning you in admin.
Are you unsure whether your income puts you within MTD for Income Tax? Or have you missed the first quarterly update and need a practical route forward?
Contact Price & Accountants to discuss your position and build a compliant, efficient process for 2026 and beyond.
No. MTD for VAT applies to VAT-registered businesses and focuses on VAT records and returns. MTD for Income Tax applies to qualifying sole traders and landlords and involves quarterly income tax updates plus year-end finalisation.
No. Dividends do not count towards qualifying income. However, if you also have self-employment or property income above the relevant threshold, you may still need to use MTD ITSA.
No. Quarterly updates are summaries of your income and expenses. You still need to complete the year-end finalisation process and pay the tax due.
Yes, you can authorise an agent to act on your behalf. Your responsibilities do not disappear, however : you still need to provide complete and accurate records in good time.
Your position may change, but you should not assume that you can stop using MTD immediately. HMRC rules apply to changing circumstances, so take professional advice before opting out or changing your reporting process.
