Making Tax Digital for Income Tax: What Changes and When

If you're self-employed or a landlord, Making Tax Digital for Income Tax is no longer a future worry — as of 6 April 2026, it's actually here. If your income is above the threshold, you can no longer just gather your receipts in January and file one tax return. You now need to keep digital records and send HMRC a summary of your income and expenses every three months.

We know that sounds like a hassle — but most of the panic comes from not knowing what's expected. Here's the plain-English version: who's affected, what changes, and what to do.

The real problem: the once-a-year bookkeeping habit

Let's be honest about how most sole traders and landlords have handled their books until now. Receipts stuffed in a drawer, a frantic week in January trying to remember what that £340 payment in March was for, and a tax return filed with fingers crossed. Missed expenses mean overpaid tax. Guessed figures mean HMRC enquiries. And the 31 January deadline has ruined many a Christmas.

Making Tax Digital ends that rhythm completely — four reporting deadlines a year leaves nowhere to hide a year's chaos. Get your records right as you go, though, and tax time becomes a quick review instead of a crisis.

Who's affected, and when

The rollout is phased by income level, and the test is on your gross income — your turnover before expenses — from self-employment and property combined. That's the bit that catches people out: it's not your profit.

• From 6 April 2026: sole traders and landlords with qualifying income over £50,000. HMRC looks at your 2024/25 tax return to decide whether you're in this group.
• From 6 April 2027: the threshold drops to £30,000.
• From April 2028: the government plans to bring it down to £20,000.

So if your freelance work brought in £45,000 and your rental flat £12,000, your combined £57,000 puts you in from April 2026 — even if your profit was far lower. Below the threshold? You're not in yet, though you can sign up voluntarily to get ahead.

What does Making Tax Digital for Income Tax actually change?

Four things, and only four. Everything else — how much tax you pay, and when you pay it — stays exactly the same.

1. Digital records. Every sale and expense must be recorded in MTD-compatible software — Xero, QuickBooks, FreeAgent or Sage — as you go. A photo of a receipt on your phone is a handy backup, but the transaction itself has to live in the software: a standalone spreadsheet you retype figures from doesn't meet the rules.

2. Quarterly updates. Four times a year you send HMRC a summary of your income and expenses through your software. The standard quarters run 6 April–5 July, 6 July–5 October, 6 October–5 January and 6 January–5 April, and each update is due about five weeks after the quarter ends (typically 7 August, 7 November, 7 February and 7 May). These aren't tax bills — HMRC doesn't work out what you owe from them.

3. A final declaration. After the tax year ends, you finalise your figures and submit your tax return through the software by 31 January, as before. But from the 2026/27 tax year, the old HMRC online return and paper filing are gone.

4. Nothing about payment dates. Your balancing payment is still due by 31 January, and payments on account by 31 January and 31 July. Only the reporting rhythm changes, not the money.

You can read HMRC's official overview of Making Tax Digital for the full detail.

What to do this week

1. Check your qualifying income

Dig out your 2024/25 tax return and add your gross self-employment income to your gross rental income. Over £50,000 combined? You're in from April 2026, and your first quarterly period is already running. Between £30,000 and £50,000? You have until April 2027 — use the time to go digital now, while there's no pressure.

2. Get your software sorted

Already using Xero, QuickBooks, FreeAgent or Sage? You're most of the way there — just check MTD for Income Tax is enabled and your bank feed is connected so transactions flow in automatically. Still on paper or spreadsheets? Pick one package and commit. Ask your bookkeeper which they'd recommend — it matters they can work in it too. You can see how our bookkeeping services work with all the major software.

3. Sign up with HMRC

Software alone isn't enough — you must actively sign up, as HMRC won't enrol you automatically. You'll need your Government Gateway ID, Unique Taxpayer Reference and National Insurance number. Your bookkeeper or accountant can sign you up on your behalf — just get in touch and we'll handle it.

What to avoid

• Don't wait until January. The old January scramble doesn't survive four quarterly deadlines — a mess in October means a mess in November.
• Don't assume you're below the threshold because your profit is modest. HMRC looks at gross income. Plenty of businesses with thin margins are caught by this.
• Don't run two systems. Paper records plus software means double work and mismatched figures. Pick the software and make it your single source of truth.
• Don't ignore the sign-up step. We've seen businesses buy the software, use it for months, and never actually register with HMRC. The software alone doesn't make you compliant.

How we can help

This is what we do every day: set up MTD-compatible software, keep digital records tidy through the year, send the quarterly updates on time, and file the final declaration — all in the background while you run your business. Check our frequently asked questions or drop us a message and we'll tell you honestly whether MTD applies to you yet, and what it would take to get ready.