Making Tax Digital for Income Tax (MTD for Income Tax) is the biggest change to UK personal tax reporting since Self Assessment arrived in the 1990s. Since 6 April 2026, sole traders and landlords above an income threshold must keep digital records and send HMRC a summary of their income and expenses every quarter, using compatible software. The threshold falls in 2027 and again in 2028, so hundreds of thousands more people are on the way in.
This guide explains who is in scope, how the quarterly cycle works, how the new penalty system applies (including the first-year “soft landing”), and the practical steps to take. It reflects HMRC guidance as checked on 7 November 2026.
Key takeaways
- In scope now: sole traders and landlords whose qualifying income in 2024/25 was more than £50,000, from 6 April 2026. HMRC put this first wave at about 864,000 people.
- Next waves: more than £30,000 (based on 2025/26) from 6 April 2027, and more than £20,000 (based on 2026/27) from 6 April 2028.
- Qualifying income is gross self-employment plus property income before expenses, not profit.
- Four quarterly updates a year, due on 7 August, 7 November, 7 February and 7 May, plus a year-end tax return by 31 January.
- Soft landing: no penalty points for late quarterly updates in 2026/27. Late payment penalties and the year-end return deadline still apply in full.
In this guide
Who has to use MTD for Income Tax
MTD for Income Tax applies to individuals registered for Self Assessment who receive income from self-employment, UK or overseas property, or both, once their qualifying income passes the threshold. The obligation is phased in:
| Qualifying income | Measured in tax year | Must use MTD from |
|---|---|---|
| More than £50,000 | 2024 to 2025 | 6 April 2026 |
| More than £30,000 | 2025 to 2026 | 6 April 2027 |
| More than £20,000 | 2026 to 2027 | 6 April 2028 |
HMRC uses the figures on your tax return for the relevant year to decide whether you are in scope. If your 2025/26 return, filed by 31 January 2027, shows qualifying income above £30,000, you will need to start from April 2027.
Not currently in scope: limited companies (which pay Corporation Tax), and partnerships, which are expected to join later. Some individuals can claim an exemption, for example if they are digitally excluded because age, disability, location or other circumstances make it impractical to use computers. Exemptions must be applied for; they are not automatic.
What counts as qualifying income
This is the point most often misunderstood. Qualifying income is the total gross income (turnover or rent received) from self-employment and property, before deducting expenses. Employment income, pensions, dividends and savings interest do not count towards it.
Illustrative example: a landlord receives £26,000 in rent, and also runs a consultancy as a sole trader with £28,000 of fees and £15,000 of costs. Their qualifying income is £26,000 + £28,000 = £54,000, above the £50,000 threshold, even though their combined profit is much lower. The figures are illustrative.
The threshold applies to the combined total. Someone with a salary of £80,000 and £12,000 of rental income has qualifying income of £12,000 and is not in scope at the current thresholds.
The quarterly cycle and deadlines
Once you are in MTD, you keep digital records of each income and expense transaction during the year and send HMRC a quarterly update for each income source (each self-employment, and your property business) through compatible software. Updates are cumulative: each one covers the year to date, so corrections can be made in the next update rather than by resubmitting.
| Quarter | Period covered (standard tax-year quarters) | Update due |
|---|---|---|
| Q1 | 6 April to 5 July | 7 August |
| Q2 | 6 July to 5 October | 7 November |
| Q3 | 6 October to 5 January | 7 February |
| Q4 | 6 January to 5 April | 7 May |
After the year ends, you still file a tax return through your software. It adds any other income, reliefs and final adjustments, and it is due by 31 January following the end of the tax year. For 2026/27, that is 31 January 2028. Payment dates are unchanged: balancing payments and payments on account remain due on 31 January and 31 July.
Quarterly updates do not create a tax bill and you do not pay tax quarterly. They give HMRC, and you, an in-year view of your figures.
Penalties and the 2026/27 soft landing
MTD for Income Tax brings in the points-based late submission regime already used for VAT, together with a new late payment regime.
Late submission: points
- Each missed submission deadline earns a penalty point instead of an automatic fine.
- For quarterly submissions, reaching 4 points triggers a £200 penalty, and a further £200 for each later missed deadline while you are at the threshold.
- Points are reset to zero only when you have submitted every outstanding update and return and then met all your deadlines for a period of compliance (12 months for quarterly obligations).
- Several income sources that are late for the same deadline count as one point, not several.
- Income Tax points are counted separately from VAT points.
The 2026/27 soft landing
HMRC confirmed at the Autumn Budget 2025 that people mandated from April 2026 will receive no penalty points for late quarterly updates during the 2026/27 tax year. Three things sit outside that relief:
- You still have to submit all four quarterly updates. HMRC will not accept your year-end return until they are in.
- The year-end tax return (due 31 January 2028 for 2026/27) attracts penalties if late.
- Late payment penalties and interest apply from the first year. In the first year of MTD, HMRC allows up to 30 days, instead of the usual 15, before the first late payment penalty arises, but interest runs from the due date.
For the April 2026 group, late quarterly updates attract points as normal from the 2027/28 tax year, starting with the update due on 7 August 2027. Some published guidance indicates that a similar first-year easement will apply to people joining in April 2027. If that is you, check HMRC’s guidance for your start year before relying on it.
Late payment: percentages, not points
Late payment penalties are calculated on the tax still unpaid:
| How late | Penalty (2026/27 rates) |
|---|---|
| Up to 15 days | No penalty if paid, or a Time to Pay arrangement agreed, within this period |
| 16 to 30 days | 3% of the tax outstanding at day 15 |
| 31 days or more | A further 3% of the tax outstanding at day 30, plus a daily penalty at an annual rate of 10% on the balance |
Choosing compatible software
You must use software that HMRC recognises for MTD for Income Tax. HMRC publishes a searchable list of compatible products on GOV.UK. They range from full accounting packages to simple apps aimed at landlords, and some are bridging software that connects existing spreadsheets to HMRC. When comparing options, check that the software:
- supports every income source you have (self-employment, UK property, foreign property);
- can file the year-end tax return, not only quarterly updates. Some products cover only part of the journey;
- connects to your bank feeds if you want transactions captured automatically;
- gives your accountant or agent access, if you use one;
- fits your budget. Some providers and some banks offer free tiers for simple cases.
What to do now
- Check your qualifying income for 2024/25 (for April 2026) and 2025/26 (for April 2027), using gross income before expenses.
- Sign up for MTD for Income Tax on GOV.UK if you are in scope and have not already done so. Signing up does not happen automatically.
- Choose software from HMRC’s compatible list and set it up before your first quarter starts.
- Start digital record-keeping: record each transaction digitally. Separate bank accounts for each business make this far easier.
- Put the deadlines in your calendar: 7 August, 7 November, 7 February and 7 May, plus 31 January for the return.
- Talk to your accountant about who submits what, and check whether agent fees change.
- Use the soft landing year to build the habit, not to skip updates. From 2027/28, lateness counts.
If you also trade across borders, structured invoicing is spreading across Europe. See our country-by-country guide to e-invoicing mandates, including the UK’s planned 2029 e-invoicing requirement.
Frequently asked questions
Is the £50,000 threshold based on profit or income?
Income. It is the gross income from self-employment and property combined, before any expenses are deducted.
I am employed and also rent out a flat. Am I in scope?
Only if your gross rental income (plus any self-employment income) exceeds the threshold. Salary does not count towards qualifying income.
Do I pay tax every quarter?
No. Quarterly updates report figures; they do not trigger payments. Payment dates remain 31 January and 31 July.
Can I use a spreadsheet?
Yes, if you use HMRC-recognised bridging software to send the figures from your spreadsheet to HMRC. The records themselves must still be kept digitally.
I missed the 7 August 2026 update. What happens?
If you were mandated from April 2026, you will not get a penalty point for it because of the soft landing, but you must still submit it. Submit it as soon as possible; HMRC will not accept your year-end return without it.
Do partnerships and companies have to join?
Not at present. Limited companies are outside MTD for Income Tax. Partnerships are expected to be brought in later, and HMRC has not yet set a date.
Sources
- HMRC, Use Making Tax Digital for Income Tax (GOV.UK)
- HMRC press release, Deadline approaches for first Making Tax Digital quarterly update (GOV.UK)
- HMRC, Update notice for Making Tax Digital for Income Tax (GOV.UK)
- The Income Tax (Digital Requirements) (Amendment) Regulations 2024, SI 2024/167
- ICAS, Making Tax Digital penalties
This article is general information about UK tax rules and not personal tax advice. Your position depends on your circumstances. Check HMRC guidance on GOV.UK or speak to a qualified accountant or tax adviser. Last checked: 7 November 2026. See our Disclaimer.