What is Making Tax Digital for Income Tax?

Making Tax Digital for Income Tax is the new way sole traders and landlords report their income: digital records, four quarterly updates a year from compatible software, then a tax return. It started on 6 April 2026.

Making Tax Digital for Income Tax (MTD) changes how you keep your books and how often you report to HMRC. It does not change how much tax you pay or when you pay it. The law is the Income Tax (Digital Obligations) Regulations 2026, in force since 1 April 2026. Everything below follows GOV.UK as checked on 15 October 2026.

Who has to use it, and when

MTD is phased in over three years. Whether you are in, and when, depends on one number: your qualifying income. That is your self-employment and property income added together, before expenses. HMRC also calls it turnover. It is not your profit.

HMRC said in February 2026 that 864,000 people were in scope for the first group. In October 2026 it estimated that around 1,077,000 more sole traders and landlords will join from 6 April 2027, based on 2024-25 tax returns.

Wages, dividends and pensions do not count towards qualifying income. If you own a property jointly, only your share of the rent counts.

What changes

• Digital records. Each item of income and each expense is recorded in software, or in a spreadsheet linked to software, with the amount, the date and a category. You keep the records for at least 5 years after the 31 January deadline for that year.
• Quarterly updates. Four times a year your software sends HMRC running totals for the tax year so far. They are due by 7 August, 7 November, 7 February and 7 May. Individual receipts and invoices are not sent.
• A tax return from your software. You still send a tax return by 31 January after the tax year ends. This is where you add other income and finish the year. HMRC used to call it the final declaration.
• Penalty points. Each missed deadline earns one point. At 4 points HMRC charges a £200 penalty, and another £200 for each later missed deadline.

What stays the same

Tax is paid on the same dates as before, because a quarterly update is a report and not a payment. Separately from MTD, property income in England, Wales and Northern Ireland gets its own tax rates of 22%, 42% and 47% from 2027-28. HMRC does not recommend any software product; GOV.UK lists products that have been through its recognition process in an online software finder.

Who is exempt

GOV.UK lists automatic exemptions, so there is nothing to apply for. They include qualifying income of £20,000 or less, having no National Insurance number before the tax year starts, trustees, personal representatives, and people acting under a power of attorney. Partnerships are not in MTD yet. The 28 October 2026 Budget added people eligible for qualifying care relief (such as foster carers), non-UK resident entertainers and sportspeople, and people expected to be non-resident, who will not need MTD until further notice.

You can also apply for an exemption if it is not reasonable for you to use software because of age, health, disability, religious belief or lack of internet access. Preferring paper, being unfamiliar with software or the cost of software are not enough on their own.

What this means for you

If you are a self-employed tradesperson who took more than £30,000 before costs in 2025-26, MTD starts for you on 6 April 2027. Your first quarterly update covers 6 April to 5 July 2027 and is due by 7 August 2027. The 2025-26 return that decides this is due by 31 January 2027, so many people will only know for certain when they file it.

If you are a landlord, the same test applies to your rent before expenses, plus any self-employed turnover. Landlords with a mortgage must keep mortgage interest and other finance costs as a separate record and send them separately in each update.

If you joined on 6 April 2026, your second update, covering 6 April to 5 October 2026, is due by 7 November 2026. GOV.UK says there are no penalty points for late quarterly updates in 2026-27, though late tax returns and late payments are still penalised. At the Budget on 28 October 2026 the government said the April 2027 group will get no points for late 2027-28 quarterly updates either, though the updates must still be sent. For that group, the earliest a late update can earn a point is 7 August 2028.

Steps to get ready

1. Add up your self-employment and property income for 2025-26 before expenses, using your share of any jointly owned property.
2. Compare it with the table above to find your start date. The free MTD check does this for you.
3. Make sure you are registered for Self Assessment and have filed a return in the last 2 years. HMRC needs both before you can sign up.
4. Choose how the work gets done: software you use yourself, bridging software for your spreadsheet, an accountant or bookkeeper, or a managed service.
5. Start keeping digital records before your start date, so your first update is a copy of work already done.
6. Sign up on GOV.UK, or ask whoever is doing the work for you to sign you up.
7. Put the four deadlines in your diary: 7 August, 7 November, 7 February and 7 May.

There are more guides for each trade in the trades section, and for rental income in the landlord section.