Making Tax Digital (MTD) for Income Tax: What Sole Traders and Landlords Need to Know
- 6 days ago
- 3 min read
Making Tax Digital for Income Tax is a new way for many sole traders and landlords to report their income and expenses to HMRC. Instead of keeping paper records or leaving everything until the end of the tax year, you may need to keep digital records and send quarterly updates using compatible software.
This does not mean you will need to file four full tax returns a year or pay tax four times a year. The aim is to keep your records more up to date and give you a clearer view of your tax position throughout the year.
When the rules will apply
The start date depends on your qualifying income.
You may need to join Making Tax Digital for Income Tax from 6 April 2026 if your qualifying income is over £50,000.
You may need to join from 6 April 2027 if your qualifying income is over £30,000.
You may need to join from 6 April 2028 if your qualifying income is over £20,000.
Quarterly updates are not full tax returns
Under Making Tax Digital, you will send quarterly updates to HMRC. These updates are not full tax returns. They are summaries of your income and expenses for the relevant period.
The quarterly update deadlines are:
7 August
7 November
7 February
7 May
You will still need to make a final declaration through compatible software after the tax year ends. The usual 31 January deadline will still apply.
For example, for the 2026 to 2027 tax year, the quarterly updates would be due on 7 August 2026, 7 November 2026, 7 February 2027 and 7 May 2027. The deadline for the end of year update and final declaration would be 31 January 2028.
Your tax payment dates are not changing
Making Tax Digital changes how you report your figures, not the usual tax payment dates. Sending quarterly updates does not mean you automatically need to pay tax every quarter.
You should still plan ahead for your tax bill, but the quarterly updates are mainly there to keep your records current and help estimate your tax position.
What HMRC will receive
HMRC will not see all your records. It will only receive the information you submit through your compatible software.
This will normally be income and expense totals for each self employment or property income source for the relevant quarterly period.
Using spreadsheets
You may still be able to use spreadsheets, but they must be digitally linked to compatible Making Tax Digital software. The key point is that your records need to meet HMRC’s digital record keeping requirements.
If you already use spreadsheets, we can review your current setup and advise whether it is suitable or whether changes are needed.
Choosing the right software
HMRC does not provide its own software for Making Tax Digital for Income Tax. You will need compatible software, or you can work with an accountant who can help you file through the correct system.
Signing up
You should not assume that HMRC will sign you up automatically. It is your responsibility to check when the rules apply to you and make sure you are ready in time.
HMRC may contact you, but it is better to prepare early rather than wait for a letter.
Penalties and missed updates
HMRC says there are no penalties for missing a quarterly update deadline for the 2026 to 2027 tax year. However, you must still keep digital records and send the updates before submitting your tax return.
The quarterly update deadlines are 7 August, 7 November, 7 February and 7 May.
How our accounting service can help
Making Tax Digital can be easier to manage when everything is set up properly from the start. Our accounting service can help you choose suitable software, review your records, prepare quarterly updates and complete your final declaration.
This can help reduce errors, keep your records ready throughout the year and give you clearer tax estimates. It can also reduce the pressure near the 31 January deadline.
Get ready early
The best time to prepare is before the rules apply to you. Check your income level, review how you keep your records and make sure you have the right software in place.
Useful HMRC links