Does Making Tax Digital for Income Tax Apply to Me in 2026/27?
If you are a sole trader or a landlord with qualifying income over £50,000, Making Tax Digital (MTD) for Income Tax applies to you from 6 April 2026 — the 2026/27 tax year. Qualifying income means your combined gross income from self-employment and property, before expenses, based on your previous tax return. From that date you must keep digital records, send HMRC a quarterly update through compatible software and file your tax return the same way. Those earning over £30,000 join from April 2027, and over £20,000 from April 2028.
What is Making Tax Digital for Income Tax?
Making Tax Digital for Income Tax is the biggest change to Self Assessment since it was introduced. Instead of one annual tax return, affected sole traders and landlords must keep their business records digitally and send HMRC a summary of income and expenses every three months, using MTD-compatible software. At the end of the year, the software is also used to finalise and submit the tax return itself.
It follows MTD for VAT, which already requires all VAT-registered businesses to keep digital records and file VAT returns through software. If you run a VAT-registered business, the discipline will feel familiar — the difference is that it now reaches your income tax affairs too.
Who has to use it, and from when?
The rules are phased in by income level:
- From 6 April 2026: qualifying income over £50,000
- From April 2027: qualifying income over £30,000
- From April 2028: qualifying income over £20,000
Three details catch people out. First, qualifying income is your turnover before expenses, not your profit — a landlord with £52,000 of rent and £20,000 of costs is still in scope. Second, self-employment and property income are added together, so two smaller income streams can tip you over the line. Third, HMRC looks at your previous year’s tax return: whether you must comply from April 2026 depends on the qualifying income reported on your 2024/25 return.
HMRC is not leaving this to chance. From September 2026 it has been signing up taxpayers whose 2024/25 returns show qualifying income over £50,000 and who have not signed up themselves. Limited companies are not affected — MTD for Income Tax applies to individuals, and corporation tax remains outside the regime for now.
What you have to do under MTD
Keep digital records
Every business transaction must be recorded in MTD-compatible software or in spreadsheets connected to HMRC through bridging software. Paper ledgers and standalone spreadsheets no longer satisfy the rules on their own.
Send quarterly updates
Each quarter you send HMRC the running totals of your income and expenses for the year so far — no invoices or receipts, and no tax adjustments. For a standard tax-year quarter, the deadlines are:
- 6 April to 5 July — update due 7 August
- 6 April to 5 October — update due 7 November
- 6 April to 5 January — update due 7 February
- 6 April to 5 April — update due 7 May
An update is required even for a quarter with no activity, and each self-employment or property business needs its own updates.
File your return and pay by 31 January
The payment timetable has not changed. You still submit your tax return and pay what you owe by 31 January following the end of the tax year, with payments on account where they apply. The quarterly updates are informational — they are not four tax bills.
Worked example: two income streams in 2026/27
Asha is a self-employed graphic designer in Islington who also lets out a flat. Her 2024/25 tax return showed £38,000 of gross self-employment income and £16,000 of gross rental income — £54,000 of qualifying income in total. Neither stream exceeds £50,000 on its own, but together they do, so Asha must use MTD for Income Tax from 6 April 2026.
For the 2026/27 tax year she keeps digital records in compatible software and sends quarterly updates for each business by 7 August 2026, 7 November 2026, 7 February 2027 and 7 May 2027. She then finalises her return through the software and pays her tax by 31 January 2028, exactly as before. Her workload has shifted from one year-end scramble to a short routine every quarter — which, handled well, also means she knows her tax position all year round.
What happens if you miss a deadline?
MTD brings a points-based penalty system. Each missed submission deadline earns one penalty point, and at 4 points you receive a £200 penalty, then £200 for every further miss. Helpfully, HMRC has confirmed there are no penalties for missed quarterly updates during 2026/27 — the first year is a grace period for the quarterly cycle, though the tax return deadline still carries consequences.
Late payment is treated more firmly: for 2026/27, tax unpaid 16 to 30 days after the due date attracts a 3% penalty, a further 3% applies at day 30, and from day 31 an annual 10% charge accrues on the outstanding balance, plus interest from day one.
How to get ready
If your 2024/25 qualifying income was over £50,000, the sensible steps are to choose MTD-compatible software now, move your record-keeping onto it before 6 April 2026 if you have not already, and diary the four quarterly deadlines. If you are near the £30,000 or £20,000 lines, start tracking your gross income so the 2027 and 2028 phases do not take you by surprise — our UK tax deadlines calendar is a useful place to keep every date in view, and our take-home pay calculator shows what your profits mean in your pocket.
Many sole traders and landlords simply hand the quarterly cycle to their accountant. Our sole trader and partnership accounting service covers digital bookkeeping, quarterly updates and the year-end return, and our personal tax advisors can confirm whether and when MTD applies to you. The full rules, including how to sign up, are on GOV.UK.
Frequently asked questions
My income is under £50,000 — do I need to do anything yet?
Not for 2026/27, but check the later phases: over £30,000 of qualifying income brings you in from April 2027 and over £20,000 from April 2028. Remember the test is gross income before expenses, with self-employment and property added together, so review your turnover rather than your profit.
Does MTD for Income Tax apply to my limited company?
No. It applies to individuals with self-employment or property income. Limited companies continue to file corporation tax returns as normal, and if the company is VAT-registered it already follows MTD for VAT. A director’s personal rental income, however, counts towards their own qualifying income.
Will I have to pay tax four times a year?
No. Quarterly updates are summaries of income and expenses, not tax bills. Your tax is still due by 31 January after the tax year ends, with payments on account on 31 January and 31 July where they apply.
Written by the Accountactical Team — ACCA-Approved Accountants, London.
This article is general information for UK small-business owners, not formal tax advice — speak to an accountant about your own circumstances before acting on it.
