Making Tax Digital for Income Tax:
does it apply to you?

If you’re self-employed or you let out property, you’ve probably seen letters or headlines about Making Tax Digital. Here’s how to tell whether it applies to you, when you start, and what changes in your year.

Who it applies to

Making Tax Digital (MTD) for Income Tax is for sole traders and landlords who file a Self Assessment return. Whether you’re in depends on your qualifying income: your self-employment and property income added together, before expenses. That’s your turnover and rent received, not your profit.

HMRC looks at an earlier tax return to decide when you start:

Qualifying income	Tax year HMRC looks at	You start from
Over £50,000	2024/25	6 April 2026
Over £30,000	2025/26	6 April 2027
Over £20,000	2026/27	6 April 2028

Some income doesn’t count towards the total, including:

• wages from a job taxed through PAYE
• dividends, the State Pension and private pensions
• your share of profit as a partner in a partnership

If you own a let property with someone else, you count your share of the rent. If you’re a partner and you also have your own sole trade or rental income, that income still counts.

Some people can get an exemption, for example if you’re digitally excluded and it isn’t reasonable for you to use software. HMRC has a separate page on who qualifies and how to ask.

What changes

Three things change once you’re in.

Digital records. You keep a record of your income and expenses in software that works with MTD for Income Tax, through the year rather than at the end of it.

Quarterly updates. Every three months your software sends HMRC the totals for each income and expense category. HMRC doesn’t see individual transactions. Each update covers the tax year so far, so if you spot a mistake you correct your records and the next update picks it up.

Update period	Deadline
6 April to 5 July	7 August
6 April to 5 October	7 November
6 April to 5 January	7 February
6 April to 5 April	7 May

You can choose calendar quarters instead (1 April to 30 June, and so on). The deadlines stay the same.

Your tax return. After the year ends you still file a return by 31 January, but you send it through your MTD software. That’s where you add any other income, claim reliefs and confirm the figures are final. Your payment dates don’t change.

Penalties

2026/27 is the first year, and HMRC isn’t giving penalty points for late quarterly updates this year. Late returns and late payments are still penalised.

From 2027/28, each missed quarterly update or return deadline adds a point. At 4 points you get a £200 penalty, then another £200 for each deadline you miss after that.

Late payment penalties work differently. Pay within 15 days and there’s no penalty. After that, HMRC adds 3% of the tax still owed at day 15 and another 3% at day 30, then charges 10% a year, day by day, from day 31. From 2027/28 the two 3% charges become 4%.

These penalties don’t apply to payments on account.

Choosing software

HMRC keeps a list of software that works with MTD for Income Tax. Before you pick one, check it covers every type of income you have, for example self-employment and UK property, and that it can send your tax return as well as your quarterly updates.

What you need to do

• Add up your self-employment and property income, before expenses, for 2024/25, 2025/26 and 2026/27.
• If either total is over the threshold for that year, note your start date.
• Choose software and start keeping your records in it from the first day of your MTD year.
• Sign up before your MTD year starts on 6 April, so your records are digital from day one.
• Put the four quarterly deadlines in your diary, plus 31 January for your return.
• If you think you’re exempt, check HMRC’s exemption guidance before your start date.

Key dates

• 6 April 2026: MTD starts if your qualifying income was over £50,000 in 2024/25.
• 6 April 2027: starts if it was over £30,000 in 2025/26.
• 6 April 2028: starts if it was over £20,000 in 2026/27.
• 7 August, 7 November, 7 February and 7 May: quarterly update deadlines.
• 31 January: your tax return, sent through MTD software, and any tax you owe.