Making Tax Digital for Income Tax: a plain English guide
Making Tax Digital for Income Tax became compulsory on 6 April 2026 for sole traders and landlords with qualifying income over £50,000. From April 2027 the threshold drops to £30,000. Here’s what it means for you, in plain English.
What is Making Tax Digital for Income Tax?
Making Tax Digital (MTD) is HMRC’s programme to move tax records and returns online. VAT-registered businesses have followed MTD for VAT since 2022. MTD for Income Tax is the next stage, and it changes how self-employed people and landlords report their income.
Instead of one tax return a year, you now need to:
- Keep digital records of your business and property income and expenses, using software that works with MTD.
- Send a quarterly update to HMRC every three months, summarising your income and expenses.
- Submit a final declaration after the end of the tax year, by 31 January, confirming your total income and paying any tax due.
Who has to join, and when?
MTD for Income Tax applies to individuals who are sole traders and/or landlords, based on their qualifying income: gross self-employment turnover plus gross property income, before expenses.
| From | Qualifying income over | Based on your tax return for |
|---|---|---|
| 6 April 2026 | £50,000 | 2024–25 |
| 6 April 2027 | £30,000 | 2025–26 |
| 6 April 2028 | £20,000 | 2026–27 |
Example: a Ferndown landlord with £22,000 of rent who also earns £14,000 a year from a self-employed business has qualifying income of £36,000. They will need to use MTD for Income Tax from April 2027.
Employment income, pensions and dividends don’t count towards the threshold – only self-employment and property income. Partnerships and limited companies aren’t currently included (companies pay corporation tax instead).
Key deadlines
Using the standard quarterly periods:
| Quarter | Quarterly update due |
|---|---|
| 6 April – 5 July | 7 August |
| 6 July – 5 October | 7 November |
| 6 October – 5 January | 7 February |
| 6 January – 5 April | 7 May |
| Final declaration for the year | 31 January following |
You can choose to use calendar quarters (for example 1 April to 30 June) instead, if that suits your records better. The deadlines stay the same.
What about penalties?
MTD for Income Tax uses a points-based penalty system. Each missed submission deadline earns a point; once you reach four points you pay a £200 penalty, and a further £200 for each late submission after that. HMRC has confirmed that people who joined in April 2026 won’t receive penalty points for late quarterly updates during 2026–27, but the end-of-year return must still be on time. Late payment penalties and interest apply as normal.
Can I be exempt?
Some people can apply for an exemption – for example, if it isn’t reasonably practical for them to use computers or the internet because of age, disability, location or religious beliefs. Certain other groups are also exempt or deferred. If you think you might qualify, I can help you check and apply.
What should I do now?
- Check your qualifying income from your 2024–25 and 2025–26 tax returns.
- Choose MTD-compatible software – such as Xero, QuickBooks or Sage – or ask me to recommend one.
- Start keeping digital records now, even if you don’t need to join until 2027 or 2028. It makes the switch much easier.
- Decide who will submit your updates. Many people prefer to hand this to a bookkeeper so they never miss a deadline.
How Knights Book Keeping can help
I help sole traders and landlords across Verwood, Ferndown, Wimborne, Ringwood and the rest of East Dorset get ready for MTD and stay compliant. My MTD plan is £31 a month (no VAT to add) and covers your bookkeeping plus all five MTD returns – the four quarterly updates and the final declaration. I can:
- Confirm whether and when you need to join
- Set up and connect your software, and train you to use it if you wish
- Keep your records up to date and submit every quarterly update
- Prepare and file your final declaration
See my MTD for Income Tax service or get in touch for a free, no-obligation chat.
This guide is general information based on HMRC’s published rules as at September 2026 and isn’t personal tax advice. Rules can change, so please check your own situation.