Making Tax Digital for Income Tax: 2026/27 Deadlines, Thresholds and What to Do Now

Making Tax Digital (MTD) for Income Tax became mandatory on 6 April 2026 for self-employed people and landlords with gross income over £50,000. The first quarterly update was due on 7 August 2026. The next is due on 7 November 2026 and covers 6 July to 5 October. If you are filing it, the quarterly update checklist lists what to reconcile first.

By 12 August, 436,000 sole traders and landlords had sent their first quarterly update and more than 570,000 had signed up, according to HMRC. Since September, HMRC has been signing up the people it believes should be in and who have not done it themselves. If you have had that letter, go straight to what to do if HMRC signed you up.

If you are self-employed, a freelancer, a sole trader, or a landlord in the UK, this guide covers what applies: who is in scope, what you must submit and when, what counts as a digital record, which software you need, and what happens if you miss a deadline. If your income is mostly rent, read Making Tax Digital for landlords next: it covers gross rent, joint ownership and letting agent statements in detail.

What Is Making Tax Digital?

Making Tax Digital is HMRC's programme to modernise the UK tax system. Instead of filing one annual Self Assessment return, you keep digital records throughout the year and submit quarterly summaries to HMRC.

MTD for VAT has been mandatory since April 2022. The phase that affects self-employed individuals and landlords — MTD for Income Tax Self Assessment (ITSA) — started in April 2026.

Making Tax Digital Thresholds: Who Is Affected?

MTD for ITSA applies to UK individuals with income from self-employment (sole traders, freelancers, contractors) or property (landlords receiving rental income), where their combined gross income, which HMRC calls qualifying income, is over the threshold for their phase:

The threshold is gross income, not profit. Turnover from self-employment and gross rental income are added together before any expenses, allowances, or deductions.

Worked example: a freelance designer with £42,000 of self-employment turnover who also receives £12,000 in rent has combined gross income of £54,000. That is above £50,000, so Phase 1 applies, even though their taxable profit after costs is far lower.

There is no date yet for anyone under £20,000. Below that, you stay on the annual Self Assessment return.

What Counts Towards the Threshold

HMRC's qualifying income guidance counts:

• Self-employment turnover, before expenses
• UK property income, before expenses
• Foreign property income, if you are UK tax resident
• Your share of jointly owned property, not the property's total

It does not count employment income taxed through PAYE, dividends (including from your own company), the State Pension or private pensions, or your share of profit from a partnership.

Landlords are hit hardest by the gross rule, because mortgage interest and agent fees do not reduce the figure: £55,000 of rent against £48,000 of costs is £55,000 of qualifying income, not £7,000. Making Tax Digital for landlords covers the property rules, including how joint ownership is treated.

How to Check Your Own Figure

1. Open the return the table points to. For April 2027, that is your 2025/26 return, due by 31 January 2027.
2. Add the turnover from your self-employment pages to the total rents from your property pages. Use the income figures, never the profit lines.
3. Count only your share of anything you own jointly. If you only learn your share after expenses have been taken off, HMRC uses that net figure.
4. Check for a part year. If you started trading during the year, HMRC scales your turnover up to a full year where it has the information, so six months at £20,000 counts as £40,000.

If the total is over the threshold, HMRC writes to you after it has processed the return. You can also check with HMRC's eligibility tool.

Just crossed a threshold? One return over the line is enough: you are in from the April after that return was due. One year under it does not take you out: you can leave only after three tax years in a row below the threshold.

Most people sign up themselves through their Government Gateway account. It is a separate step even if you already use MTD for VAT. Since September 2026, HMRC has also been signing up, in stages, anyone whose qualifying income was over £50,000 in 2024/25, who is not exempt and who has not signed up. If that is you, see what to do if HMRC signed you up.

Partnerships Are Not In Scope

If you trade through a partnership, MTD for Income Tax does not currently apply to it. General partnerships, limited partnerships, and LLPs have all been deferred with no mandation date set.

Just as importantly, partnership profit share is not counted in your qualifying income for the threshold test. If you have £35,000 of sole-trader turnover and a £40,000 share of partnership profits, your qualifying income is £35,000 — you are not in Phase 1.

Limited companies are outside MTD for Income Tax entirely, and MTD for Corporation Tax is not going ahead: HMRC dropped it in its July 2025 transformation roadmap. A company meets MTD only through VAT, if it is VAT-registered. A director's salary and dividends do not count as qualifying income, but any sole-trader or rental income they have on the side does.

The Two Core Submissions

Quarterly Updates

You submit cumulative year-to-date summaries of income and expenses every quarter. These are not tax returns — they are running totals, broken down by category.

Because the updates are cumulative, anything missed in an earlier quarter is picked up in the next one. You do not need to go back and amend the earlier update: a receipt from May that you find in October lands in the Q2 year-to-date figures.

Each income source files separately. One freelance business plus one rental property means two sets of quarterly updates. UK property and foreign property also count as separate businesses.

Final Declaration

After the fourth quarter, a Final Declaration replaces your Self Assessment return. It pulls together every income source — self-employment, property, employment, dividends, savings, capital gains — and confirms your total tax liability. The deadline is 31 January following the end of the tax year, so 31 January 2028 for 2026/27.

Note: older guides describe a separate End of Period Statement (EOPS) filed before the Final Declaration. That step was removed and its function folded into the Final Declaration. The process is quarterly updates, then Final Declaration — nothing in between.

Digital Record Keeping

Under MTD you must record, digitally, for every business transaction:

• the date
• the amount
• the category of income or expense

Paper records alone are not sufficient. That means MTD-compatible software, or a spreadsheet paired with bridging software.

You are not required to store a digital image of every receipt — the digital requirement applies to the transaction record. But HMRC can request the underlying documents during a compliance check, and the retention rules have not changed: keep records for at least 5 years after the 31 January filing deadline.

Since you need the receipts anyway, capturing them digitally creates the digital record and the supporting evidence in one step. See our guides to VAT record keeping requirements and whether bank statements count as receipts for what HMRC actually expects behind each figure. For what a compliant record looks like transaction by transaction, and whether you need to scan receipts, see MTD digital records explained.

Digital Links

Once data is in your digital records, any transfer between systems or to HMRC must be digital.

Not acceptable:

• Manually typing figures from one system into another
• Copy-pasting between a spreadsheet and accounting software

Acceptable:

• API connections between products
• CSV or structured file imports
• Automated syncs
• Formulas within a single spreadsheet

If you keep records in a spreadsheet, you need bridging software to submit. If you use separate tools for record keeping and filing, the handoff between them has to be one of the acceptable methods above.

What Software Do You Need?

You need MTD-compatible software that can submit quarterly updates and your Final Declaration to HMRC through their API. HMRC maintains an official list of recognised providers and a software finder that filters by your income sources and accounting period.

Options range from full accounting packages (Xero, QuickBooks, FreeAgent, Sage) to lighter tools built for MTD submission, plus free options for simple affairs. HMRC explicitly permits using more than one product — for example one for creating records and sending quarterly updates, another for the tax return. Our MTD software guide walks through the choice.

MTD Penalties

MTD uses a points-based system for late submissions, with a significant concession in the first year:

• Quarterly updates carry no penalty points during 2026/27. Confirmed at Autumn Budget 2025.
• Late annual returns do earn points, this year and after.
• The threshold is 4 points for quarterly filers; reaching it triggers £200, and every further miss costs another £200.
• Late payment penalties apply in full: 3% of tax outstanding at day 15, a further 3% at day 30, then 10% per year charged daily. For your first year in the system you get an extra 15 days before the first charge.
• A £3,000 penalty exists for failure to keep digital records or a break in digital links, though it arises through a compliance check rather than automatically.

Full detail and worked examples in our guide to Making Tax Digital penalties.

HMRC Signed You Up? What to Do Before 7 November

From September 2026, HMRC is signing up, in stages, sole traders and landlords whose qualifying income was over £50,000 in the 2024/25 tax year, who are not exempt and who had not signed up themselves. You find out through a letter in your HMRC online services account or by post. HMRC sends it to you, not to your agent, so forward it to your accountant if you have one.

Being signed up puts you on the same footing as the people who joined in April, a few months behind. HMRC's guidance for people it has signed up asks you to:

1. Check the details HMRC holds. Sign in to HMRC online services and check the self-employment and property income it has on record from your previous returns.
2. Get compatible software. HMRC's software finder lists free and paid options. You need software that sends quarterly updates, and it has to cover every income source you have.
3. Create digital records from 6 April 2026. Not from the date of the letter: from the start of the tax year.
4. Send your overdue quarterly update as soon as possible. The Q1 update (6 April to 5 July) was due on 7 August. Q2 (to 5 October) is due on 7 November 2026.

There are no penalty points for missing a quarterly update deadline in 2026/27, so a late first update does not cost you a point. Points still apply if you miss the tax return deadline, and late payment penalties apply as normal.

Think you should not be in MTD? Contact HMRC through Self Assessment general enquiries. Exemption applications, for example on grounds of digital exclusion, go the same way, by phone or post, and HMRC aims to reply within 28 days. Keep using MTD while you wait.

Rebuilding six months of records

The filing part is quick once you have software. The work is the backlog: every sale, rent payment and expense since 6 April needs a digital record with a date, an amount and a category, and HMRC can ask for the receipt behind any of them. Most of that paperwork sits in three places:

• Your inbox. Online orders, subscriptions and supplier invoices arrive by email. Email history extraction scans past emails back to a date you choose and imports the receipts and invoices it finds, so April to October comes in as one batch rather than one forwarded email at a time. It works on both paid plans, and the first 10,000 historical emails are included.
• Your bank statements. Upload statements as PDF, Excel or CSV and the bank statement extractor turns every line into a transaction, then matches it to the receipts you already have. The lines left unmatched are your list of missing receipts.
• Paper. Photograph the pile with the receipt scanner. The date, supplier, amount and VAT are read for you.

SparkReceipt is not HMRC-recognised filing software and does not send quarterly updates. It keeps the records, then syncs them to Xero or QuickBooks Online, or exports them as CSV or Excel for any other MTD tool, which keeps the digital link intact. See MTD-ready record keeping for how that handoff works, and the quarterly update checklist before you file.

What to Do Now

If you are already in Phase 1, the job is keeping the rhythm:

1. Diarise 7 November — the Q2 deadline — our quarterly update checklist walks through the reconciliation
2. Reconcile before you file, not at year end — match each bank transaction to its receipt as you go, so Q2's figures are right first time
3. Fill the Q1 gaps — anything missed in the first quarter can simply be included now, since updates are cumulative
4. Check your software actually submits — a tool that organises records is not the same as one HMRC recognises for filing
5. Confirm who files — if your accountant submits on your behalf, make sure you both know it

If your phase is still ahead, the £30,000 threshold arrives in April 2027 and £20,000 in April 2028. Work through this before then:

1. Confirm your gross income threshold — check your latest return for turnover and gross rents, not profit
2. Choose MTD-compatible software — and check it supports every income source you have
3. Sign up through Government Gateway before your start date. HMRC now signs up people who miss this step, but doing it yourself lets you check your details and choose your software first
4. Set up digital record keeping now — scan receipts as they arrive and connect your email so digital receipts are captured without forwarding. Starting early means the mandate is a filing change rather than a filing change plus a bookkeeping overhaul
5. Review your allowable expenses — MTD does not change what is deductible, but quarterly reporting makes gaps more visible. See self-employed expenses, flat rate expenses, and mileage allowance
6. Talk to your accountant — agree who submits quarterly updates, which software they can work in, how you will share records, and whether your workflow needs to change
7. Apply early if you need an exemption. If you are due to start on 6 April 2027 and think you qualify, for example because you are digitally excluded, HMRC is taking applications for 2027/28 now, by phone or post

Preparation Checklist

• Gross income threshold confirmed (Phase 1, 2, or 3)
• MTD-compatible software chosen, covering all income sources
• Signed up for MTD for Income Tax, or HMRC's sign-up details checked if it signed you up
• Digital receipt capture in place
• Email connected for automatic receipt capture
• Bank statements reconciled against receipts
• Allowable expense categories reviewed
• Workflow agreed with your accountant
• Quarterly deadlines in the calendar — 7 Aug, 7 Nov, 7 Feb, 7 May

If receipts are the part that breaks down — and for most people they are, because rent and invoices arrive as clean bank lines while costs arrive as paper — MTD-ready record keeping covers how to close that gap.

Making Tax Digital FAQ

When is the next MTD deadline?

The Q2 quarterly update, covering 6 July to 5 October, is due on 7 November 2026. After that come Q3 on 7 February 2027 and Q4 on 7 May 2027, then the Final Declaration for 2026/27 on 31 January 2028.

I got a letter saying HMRC has signed me up. What now?

Check the details HMRC holds, get compatible software, build digital records back to 6 April 2026 and send your overdue quarterly update as soon as you can. Late quarterly updates carry no penalty points in 2026/27. The steps are in what to do if HMRC signed you up.

Does MTD apply to limited companies?

No. MTD for Income Tax covers sole traders and landlords, and MTD for Corporation Tax is not going ahead: HMRC dropped it in July 2025. A limited company meets MTD only through VAT, if it is VAT-registered. A director's own sole-trader or rental income still counts towards their personal threshold.

Does MTD apply to me if I am self-employed?

Yes, if your combined gross income from self-employment and property exceeds the threshold for your phase — £50,000 from April 2026, £30,000 from April 2027, £20,000 from April 2028. Gross means turnover before expenses.

What is MTD for ITSA?

MTD for Income Tax Self Assessment is the branch of Making Tax Digital that applies to sole traders and landlords. It replaces the annual Self Assessment return with quarterly updates plus a Final Declaration.

Do I need to submit every receipt quarterly?

No. Quarterly updates are summary totals of income and expenses, not individual transactions. You must keep the underlying receipts in case HMRC requests them.

Can I use a spreadsheet for MTD?

Yes, but you need bridging software to submit the data to HMRC digitally. You cannot manually type figures into HMRC's systems.

Do partnerships have to comply?

No. General partnerships, limited partnerships, and LLPs are all deferred with no mandation date. Partnership profit share also does not count towards your personal qualifying income threshold.

Will I be fined for a late quarterly update this year?

Not a penalty point — quarterly updates carry no points during 2026/27. Late payment penalties still apply, and a late annual return still earns a point.

What if my income drops below the threshold?

One low year does not take you out. You can stop using MTD only once your qualifying income has been below the threshold for three tax years in a row. HMRC checks this from your returns and, if you qualify, offers the option to opt out in your online services account.

Does MTD replace Self Assessment?

For income covered by MTD (self-employment and property), the quarterly updates and Final Declaration replace the Self Assessment return. Other income types are declared in the Final Declaration.

Can I apply for an exemption?

You can apply on grounds of digital exclusion: age, disability, location without reliable internet, or religious objection. Applications are assessed individually, and this must be requested separately even if you already hold an exemption for MTD for VAT. You apply by phone or post through Self Assessment general enquiries, and HMRC aims to reply within 28 days. If you are due to start in April 2027, you can apply for 2027/28 now.

Thresholds, deadlines, sign-up, exemption and penalty rules verified against HMRC guidance on GOV.UK (including the qualifying income and HMRC-led sign-up guidance, both updated 11 September 2026), ICAEW Tax Faculty, ATT and LITRG material as of October 2026. The Autumn Budget on 28 October 2026 may change some of this. Check current HMRC guidance before acting on any figure here.