Your new tax calendar: what MTD for income tax looks like on the ground
Making Tax Digital for Income Tax went live on 6 April 2026. If your combined income from self-employment and property hit £50,000 or more in the 2024–25 tax year, you’re in scope. The single annual Self Assessment return has become four quarterly digital updates plus a year-end final declaration, and HMRC’s points system fines you £200 once you’ve missed four deadlines, then £200 again for each miss after that.
Here’s what your tax year actually looks like now: the dates, the workload and the steps that keep you clear of it without it taking over your life.
Who is in scope right now
The threshold uses gross income, so turnover rather than profit. Turn over £50,000 before expenses and you’re in.
| Phase | Who joins | Based on income from |
|---|---|---|
| Phase 1, from 6 April 2026 | Sole traders and landlords with qualifying income over £50,000 | 2024–25 tax return |
| Phase 2, from 6 April 2027 | Qualifying income over £30,000 | 2025–26 tax return |
| Phase 3, from 6 April 2028 | Qualifying income over £20,000 | 2026–27 tax return |
Qualifying income means gross income from self-employment and UK property before expenses. Multiple sources are added together, so £32,000 from self-employment plus £20,000 from a rental property is £52,000 of qualifying income, and that lands you in MTD from April 2026.
Other income is ignored for this test. PAYE wages, dividends and savings interest don’t count.
Limited companies are exempt from these rules, and there’s no Making Tax Digital for Corporation Tax mandate for 2026.
The scale of this change
HMRC statistics put 864,000 sole traders and landlords in the first wave from April 2026, and estimate around 4.2 million self-employed individuals and landlords will eventually fall within scope.
A sole trader gas engineer, plumber or heating installer turning over a decent amount is either in it now or will be within two years.
Your four quarterly deadlines
The 2026–27 dates:
| Quarter | Period covered | Deadline |
|---|---|---|
| Q1 | 6 April – 5 July 2026 | 7 August 2026 |
| Q2 | 6 July – 5 October 2026 | 7 November 2026 |
| Q3 | 6 October 2026 – 5 January 2027 | 7 February 2027 |
| Q4 | 6 January – 5 April 2027 | 7 May 2027 |
| Final declaration | Full 2026–27 tax year | 31 January 2028 |
Each trade or property business gets four quarterly submissions plus the end-of-year final declaration. The quarterly updates carry income and expense figures only, with year-end adjustments left to the final declaration.
They aren’t four extra tax returns. Each one summarises business income and expenses for the three-month period, with no invoices or receipts to send, just the totals in each category.
Quarterly updates also don’t mean paying income tax four times a year. You report quarterly and pay once.
What ‘keeping digital records’ actually means in practice
The rule covers how you store records day to day, as well as how you file.
From April 2026, sole traders and landlords over the £50,000 threshold must keep digital records of every individual transaction, capturing date, amount and category. Receipts in a shoebox and an end-of-year spreadsheet summary no longer meet the requirement. Records have to live in MTD-compatible software that talks to HMRC directly.
Spreadsheets alone don’t meet the standard unless bridging software sits behind them. For most firms the cleanest route is cloud accounting with automatic bank feeds: link the business account, let transactions pull through, categorise as you go in minutes rather than hours.
For the full detail on what to keep and when, our MTD compliance guide goes through it step by step.
The penalty system explained plainly
MTD penalties work on points, like a driving licence.
Every missed quarterly update or annual return earns one point. Nothing is charged until you reach four points in a two-year period, at which stage the fine is £200, followed by a further £200 for each late return after that unless the points reset.
The Budget in November 2025 confirmed a soft landing: no penalty points for late filing of quarterly updates during the first 12 months of MTD. That covers the 2026–27 quarterly updates and nothing else. The final declaration due by 31 January 2028 sits outside it, so a late 2026–27 return still earns a point.
Use this year to get the system right, because the soft landing goes from 2027–28.
What software do you actually need
HMRC-recognised software, rather than any accounting package or a spreadsheet on its own.
Full cloud accounting covers invoicing, expense tracking, bank feeds, quarterly updates, the final declaration and VAT returns where they apply. Xero, QuickBooks, FreeAgent and Sage Business Cloud are the main UK options.
Once your records are in it, the software does the work. The quarterly submission is a few clicks, formatted and sent to HMRC for you. Your accountant can see the records in real time, which takes most of the pain out of year end.
Mucka integrates with Xero, QuickBooks, Sage and FreeAgent. Your job records, invoices and expenses flow from where you manage the work into the accounting software that handles your MTD submissions, so there’s no double entry and nothing to reconcile at quarter end.
Your action checklist
- Check your qualifying income. Take your 2024–25 Self Assessment figures, filed by 31 January 2026, and add sole-trade gross turnover to any UK property gross income. Over £50,000 puts you in Phase 1.
- Choose HMRC-recognised software. Check it supports MTD for Income Tax specifically, not only MTD for VAT. Xero, QuickBooks, FreeAgent and Sage all qualify.
- Sign up with HMRC. Register through your Government Gateway account. Your software provider’s setup guide covers linking the two.
- Connect your business bank account. The bank feed is the single biggest time-saver.
- Start recording from 6 April 2026. Digital records need to run from the start of the tax year, not from your first deadline.
- Diarise the four deadlines. 7 August, 7 November, 7 February, 7 May, with a reminder a fortnight before each.
- Submit your Q1 update by 7 August 2026. Even with the soft landing, hitting the first one cleanly builds the habit.
The upside nobody talks about
Quarterly tracking gives you a running picture of your tax position. Rather than one push at the end of January, you report through the year and see an ongoing estimate of what you owe, which makes budgeting for the bill easier and keeps the record keeping close to real time.
Anyone who has opened a January tax bill bigger than they’d set aside for will recognise what that visibility is worth.
For cutting admin more generally, our post on cutting your evening admin covers the same habits that make MTD manageable.
FAQ
Does the £50,000 threshold apply to my profit or my turnover?
Gross income, so turnover. It’s your total invoiced income before materials, fuel, tools or any other expenses. Turn over £55,000 with a £32,000 profit and you’re still in scope.
I operate as a limited company. Does MTD for Income Tax apply to me?
Not yet. Trading exclusively through a limited company keeps you outside these rules. MTD for Corporation Tax has not been mandated and no start date is confirmed at the time of writing.
What if I miss a quarterly deadline?
You get a penalty point rather than an immediate fine. The £200 charge arrives once you reach the threshold, usually four points for quarterly reporters. During 2026–27 only, the soft landing means no points for late quarterly updates, and that protection ends from April 2027.
Can I use a spreadsheet?
Not on its own. The digital records rule is the step that catches most sole traders out. The figures you submit each quarter have to originate in compatible software, or in a spreadsheet linked to bridging software, rather than being copied across from a paper diary at quarter end.
When does MTD expand to lower earners?
Qualifying income over £30,000 for 2025–26 brings you in from 6 April 2027. Over £20,000 for 2026–27 brings you in from 6 April 2028.
Ready to get set up without the faff? Mucka integrates with Xero, QuickBooks, Sage and FreeAgent, so your job management and your MTD records live in the same world. See how Mucka’s accounting integrations work and take one thing off the list.
Talk to Mucka