Making Tax Digital for Income Tax, explained like a human
MTD is the biggest change to Self Assessment since Self Assessment. Here is what it actually means, without the HMRC jargon.
The one-paragraph version
If you're a sole trader or landlord with gross income over £50,000, then since 6 April 2026 you must: keep your income and expense records digitally (software or a linked spreadsheet), send HMRC a short update every quarter through recognised software, and wrap the year up with a final declaration by 31 January — which replaces the old tax return. Lower earners join over the next two years.
Who is affected, and when
The trigger is gross qualifying income: your combined turnover from self-employment and property, before expenses. Not profit.
| Gross income (turnover) | MTD mandatory from | First quarterly update due | Checked against |
|---|---|---|---|
| £50,000+ | 6 April 2026 — already in force | 7 August 2026 | 2024/25 tax return |
| £30,000 – £50,000 | 6 April 2027 | 7 August 2027 | 2025/26 tax return |
| £20,000 – £30,000 | 6 April 2028 | 7 August 2028 | 2026/27 tax return |
| Under £20,000 | No start date announced yet | ||
HMRC looks at the tax return you already filed to decide: earn over £50,000 on your 2024/25 return and you're in from April 2026. Under £20,000? Nothing is announced for you yet.
What actually changes day to day
1. Digital records
Every business transaction needs to be recorded digitally — in software, an app, or a spreadsheet that links to submission software. A shoebox of receipts totted up in January no longer works.
2. Quarterly updates
Four times a year you send HMRC a summary of income and expenses so far. It's not a tax return and there's no tax to pay with it — think of it as a running total. Made a mistake? Fix it in the next quarter's cumulative figures. Deadlines are 7 August, 7 November, 7 February and 7 May.
3. Final declaration
After the tax year ends you finalise everything — add other income like dividends or employment, claim reliefs, and confirm the numbers — by 31 January, the same deadline you already know. This is where your actual tax bill is worked out.
What stays the same
- Tax payment dates — 31 January (and 31 July payments on account) don't move.
- What you can claim — allowable expenses and reliefs are unchanged.
- How much tax you pay — MTD changes reporting, not tax rates.
What happens if you don't comply
Late quarterly updates collect penalty points — four points means a £200 fine, and every further late submission is another £200. Full detail in MTD penalties explained.
Frequently asked questions
What is Making Tax Digital for Income Tax?
A law that changes how sole traders and landlords report income to HMRC. Instead of one Self Assessment return a year, you keep digital records and send a short update through software every quarter, then confirm the year with a final declaration by 31 January.
Is Making Tax Digital compulsory?
Yes — it became mandatory on 6 April 2026 for sole traders and landlords with gross qualifying income over £50,000. The threshold falls to £30,000 in April 2027 and £20,000 in April 2028. It is law, not an HMRC suggestion.
Does MTD mean I pay tax quarterly?
No. Quarterly updates are summaries of income and expenses, not tax bills. You still pay tax on the normal Self Assessment dates (31 January, and payments on account on 31 July where they apply).
Can I still use a spreadsheet?
Yes, if it connects to HMRC through bridging software with digital links. Copy-pasting numbers into an HMRC website is not allowed — the submission itself must come from recognised software. See keeping your spreadsheet under MTD.
What is qualifying income?
Your gross income — turnover before expenses — from self-employment and property combined. Employment (PAYE) income, pensions, dividends and savings interest do not count towards the threshold.
Get NippyTax when it launches
We are building the simplest possible way to do MTD quarterly updates — no accounting suite, no jargon. Join the waitlist and be first in when it launches.