Making Tax Digital for Income Tax is no longer something to prepare for. It started on 6 April 2026 for sole traders and landlords with qualifying income over £50,000, and the thresholds come down in the next two years. If it applies to you, you will report through software every quarter instead of relying on one annual return. Here is what that means in practice, based on GOV.UK guidance.
Who has to use Making Tax Digital for Income Tax?
It applies to self-employed people and landlords. What matters is your qualifying income, which is your total income from self-employment and property, calculated before expenses. HMRC uses the Self Assessment tax return you submitted for an earlier year to decide when you must start.
- From 6 April 2026: qualifying income over £50,000 (based on your 2024 to 2025 return).
- From 6 April 2027: qualifying income over £30,000 (based on your 2025 to 2026 return).
- From 6 April 2028: qualifying income over £20,000 (based on your 2026 to 2027 return).
If you are close to a threshold, it is worth checking now rather than waiting for a letter. You can read the full rules on GOV.UK.
What changes: records, software and quarterly updates
You need software that works with Making Tax Digital for Income Tax, and you keep your income and expenses records digitally. Each quarter you send HMRC an update from that software. It contains totals for each income and expense category, building up from the start of the tax year. HMRC does not receive individual receipts or invoices, and you still send an update if there was no income or expenses in the period.
The quarterly deadlines are:
- 7 August
- 7 November
- 7 February
- 7 May
The default update periods follow the tax year (6 April to 5 July, then to 5 October, 5 January and 5 April). If your accounting period runs from 1 April, you can choose calendar update periods, but only before you send your first update of the tax year. GOV.UK sets out the detail in its guide to sending quarterly updates.
Quarterly updates do not replace your tax return
After the final quarterly update, you check whether you need any adjustments to your self-employment and property income, then submit your tax return using your software. The Self Assessment deadline of 31 January and your tax payment still apply, so quarterly updates are an extra step, not a substitute.
Penalties
For the 2026 to 2027 tax year, no penalty points apply to late quarterly updates. After that, each missed quarterly deadline earns a penalty point, and at four points a £200 penalty applies. Penalties for late tax returns and late payments continue to apply as before. See GOV.UK on penalties for the current position.
How to get ready
- Check your qualifying income for the relevant year, before expenses, across self-employment and property.
- Choose compatible software and move your records into it. If you already use Xero, we can confirm what is needed and set it up properly.
- Sign up with HMRC. You must be registered for Self Assessment and have submitted a tax return in the last two years.
- Put the quarterly dates in your diary and agree who sends each update.
Making Tax Digital for Income Tax: common questions
Does qualifying income mean my profit?
No. Qualifying income is your gross income from self-employment and property before expenses are deducted, based on GOV.UK guidance.
What are the quarterly update deadlines for 2026 to 2027?
7 August 2026, 7 November 2026, 7 February 2027 and 7 May 2027.
Will I get a penalty for a late quarterly update?
For the 2026 to 2027 tax year, GOV.UK says no penalty points are issued for late quarterly updates. Check the GOV.UK penalties guidance for the current rules.
When does the income threshold come down?
Qualifying income over £30,000 from 6 April 2027, and over £20,000 from 6 April 2028.
Help from Stars Accounting
Stars Accounting is a Xero Certified Partner and HMRC agent based in Sawbridgeworth, Hertfordshire. We help sole traders and landlords work out whether Making Tax Digital applies, set up their software and send their quarterly updates on time. See our accounting services for the full list of what we cover.
Not sure where you stand? Book a free consultation, call us on 01279 291538, or email info@starsaccounting.co.uk.
This article is general guidance based on GOV.UK at the time of writing and is not personal tax advice. Rules and dates can change, so check GOV.UK or speak to us about your own circumstances.