Making Tax Digital for Income Tax, explained.

MTD for Income Tax

A different way to keep
your tax records.

Making Tax Digital means keeping business records in compatible software and sharing updates with HMRC during the year.

For sole traders and landlords within the rules, that means digital records, quarterly updates and an annual tax return through software. Your income and circumstances determine when you need to start. [1]

Already using MTD for VAT? Income Tax has its own rules. Being outside VAT registration does not, by itself, keep you outside MTD for Income Tax. [7]

When does it apply to me?

The rollout covers sole traders and landlords registered for Self Assessment whose qualifying income is above the relevant threshold, unless an exemption applies.

These are income thresholds before expenses. Check the relevant tax year, rather than relying on what you expect to earn this year. [1]

Compare one year’s income with the MTD threshold.

Check whether the selected year’s qualifying income is above the published threshold. This does not check earlier years or decide whether you are already required to use MTD: HMRC looks at each tax year in turn, and exemptions and other conditions can affect the result. [1]

Without JavaScript, use the table above: find the tax year your figure is for, and compare it with the threshold in that row.

What income counts?

Usually, you add together your self-employment and property income before deducting expenses. Income from more than one business or property can count towards the same total.

Employment pay, pensions and dividends are outside this calculation. They may still need to be included in your tax return. Joint property ownership and changes to your business can need a closer look. [2]

What will I need to do?

1. Keep your records digitally

   Record business income and expenses in compatible software. If you use more than one product, the relevant records need digital links between them. Agree how receipts, invoices and bank transactions will reach your records. [3]

2. Send quarterly updates

   Your software totals the income and expenses for each business. Updates are sent every three months and cover the tax year so far. They are summaries, rather than four separate tax returns. [4]

3. Complete your annual tax return

   After the tax year, make the necessary adjustments, include other taxable income and gains, and submit your return through compatible software. The deadline is 31 January following the end of that tax year. If you started MTD in April 2026, your 2025–26 return is still filed the usual way by 31 January 2027; your first MTD return covers 2026–27 and is due by 31 January 2028. [5]

Already in MTD in 2026?

If your qualifying income for 2024–25 was over £50,000, you should have been keeping digital records since 6 April 2026. Quarterly updates are due on 7 August, 7 November, 7 February and 7 May. As at 18 September 2026 the first deadline has passed and the next is 7 November 2026. Updates are cumulative: if you use standard update periods, that one covers 6 April to 5 October; if you chose calendar periods, it covers 1 April to 30 September. [4]

HMRC has said it will not apply penalty points for late quarterly updates during the 2026–27 tax year. That does not remove the requirement: every update still has to be sent before your tax return can be filed, and the usual penalty points apply if the return itself is late. If you are behind, catch up now rather than waiting for January. [4]

Dated information, checked on 18 September 2026. Gayle reviews our guides for accuracy quarterly and after any relevant announcement; this dated box is checked before each quarterly deadline and updated after it.

Make a manageable start.

Before changing the way you work, gather the basics:

• Your recent Self Assessment returns and any HMRC letters.
• A list of your self-employment and rental income sources.
• The software or spreadsheets you currently use.
• An idea of which records you can handle and where you need help.

Then agree your start date, suitable software and who will handle each task. Our VAT & MTD service explains the practical help available.

If using digital tools is not reasonably practical for you, an exemption may be available. HMRC has specific conditions, including digital exclusion; check the guidance before assuming you must use the service. [6]

The questions people ask at our MTD talks.

Gayle speaks about Making Tax Digital at local business events. These are the questions that come up at every talk, as people ask them, with a plain answer.

“What is a Gateway?”Government Gateway

Your online login for HMRC services. You’ll have one if you’ve filed a return online. MTD-compatible software connects to HMRC through it, and you can authorise your accountant to act for you through it too.

“Why do I have to do this?”

Because HMRC is introducing digital records and software-based reporting for sole traders and landlords whose qualifying income is above the relevant threshold, in stages by income level. Keeping records up to date through the year can help you spot errors and plan for your tax bill. Once you’re over the threshold it isn’t optional, unless you qualify for an exemption. [6]

“Can I still give you the receipts at year end?”

Not if you’re in scope. The records have to be kept digitally during the year and summarised to HMRC every quarter, so a bag of receipts in January no longer works. A phone app that photographs receipts as you go is the usual answer, and it spreads the work across the year instead of piling it up in January.

“Can you ring the tax office for me?”

Yes, once you’ve authorised us as your agent. We can see your MTD account, send the quarterly updates and deal with HMRC about it on your behalf.

“Do I have to pay you for this?”

The quarterly updates are extra work compared with one return a year, so yes, there is a fee for them, agreed upfront. How much depends on how much of the record-keeping you do yourself. We’ll explain the fee and agree who will keep the records before the work starts.

“Why is there extra bookkeeping?”

Because HMRC wants a summary of your income and expenses every three months, and the summary can only come from records that are up to date. Keeping up with the records should make the year-end work easier, and your software can show an estimated tax bill as you go; the figure may change when the full return is prepared.

“Why do I have to pay for Sage or Xero?”

Because the updates must be sent from software HMRC recognises. There are free and low-cost options for simple businesses and paid subscriptions with more features. We’re partners with FreeAgent, Sage and Xero and will recommend suitable software for your business; any subscription cost is shown separately in your quote.