Making Tax Digital Guide 2026 — MTD for Income Tax Explained

From April 2026, HMRC requires self-employed individuals and landlords with qualifying income above £50,000 to keep digital records and send quarterly updates through Making Tax Digital (MTD) compatible software. This guide walks you through who must register, when, how it works and what happens if you fail to comply.

What is Making Tax Digital for Income Tax?

Making Tax Digital for Income Tax Self Assessment (MTD ITSA) is HMRC’s programme to bring income tax reporting into the digital age. Instead of filing one annual Self Assessment return, qualifying taxpayers will need to:

• Keep digital records of their business and property income and expenses.
• Send quarterly updates to HMRC summarising income and expenses for each three-month period.
• Submit a Final Declaration at the end of the tax year to confirm total income and tax due.

All of this must happen through HMRC-recognised software. Paper records, spreadsheets used in isolation, or a manual login to the Government Gateway will no longer satisfy your obligations.

Who must register and when

MTD ITSA applies to self-employed sole traders and landlords (including non-resident landlords). It does not currently apply to partnerships, limited companies, or trust beneficiaries — HMRC has indicated those will follow in later phases.

Whether you must register and when depends on your qualifying income, which is the gross income from self-employment plus gross property income, before any expenses or allowances.

Who can defer or opt out?

HMRC offers exemptions for individuals whose digital exclusion is justified (for example, on grounds of disability, age or geographical isolation), foster carers, and personal representatives of deceased individuals. You must apply for exemption — it is not automatic.

Timeline — April 2026 and April 2027

The MTD timeline has been delayed several times, but as of 2026 the dates are firm. Here is what to expect over the next two tax years:

Tax year 2026/27 (starts 6 April 2026)

• Quarter 1: 6 April – 5 July 2026, submit by 7 August 2026.
• Quarter 2: 6 July – 5 October 2026, submit by 7 November 2026.
• Quarter 3: 6 October 2026 – 5 January 2027, submit by 7 February 2027.
• Quarter 4: 6 January – 5 April 2027, submit by 7 May 2027.
• Final Declaration: by 31 January 2028.

Tax year 2027/28 (starts 6 April 2027)

The £30,000 threshold takes effect. Quarterly dates follow the same pattern, with each return due one month and two days after quarter end.

How quarterly submissions work

A quarterly update is a summary, not a return. You submit totals for each income and expense category — for example, trading income, sales of goods, rent received, vehicle expenses, repairs and maintenance, professional fees. You do not need to allocate every transaction to a category at the moment of submission, but every transaction must be reflected in your digital records.

The categories follow the existing self-employment and property pages of the Self Assessment return, which means software that is fully integrated with HMRC can map your bookkeeping to the correct lines automatically.

The Final Declaration explained

After your fourth quarterly update, you submit a Final Declaration. This replaces the traditional Self Assessment return for taxpayers within MTD. The Final Declaration:

• Confirms your total income for the year from all sources (employment, dividends, savings, pensions and so on), not only from your MTD-reported businesses.
• Includes any accounting adjustments (for example, accruals, prepayments, capital allowances, private use adjustments).
• Carries the legal declaration that the information is correct and complete — the same statement you signed under the old Self Assessment system.
• Must be filed by 31 January following the tax year end.

Tax becomes payable on the same dates as today — balancing payment by 31 January, plus payments on account on 31 January and 31 July where applicable.

Penalties for non-compliance

HMRC has introduced a points-based system for late MTD submissions, alongside interest and surcharges for late payment of tax.

Late submission points

Each missed quarterly update or Final Declaration earns you one point. When you reach the threshold (four points for quarterly filers), HMRC issues a £200 penalty. Further missed submissions in the same period each trigger another £200. Points expire after 24 months of full compliance.

Late payment penalties

Late payment of tax also attracts penalties on a sliding scale:

• Up to 15 days late: no penalty if you pay or arrange a Time to Pay arrangement.
• 16–30 days late: 3% of the unpaid amount.
• Over 30 days late: a further 3%, plus 10% per annum daily interest from day 31.

HMRC interest is also charged from the due date, separately from the penalty.

How to prepare today

1. Check your qualifying income. Look at your last two Self Assessment returns. If the combined turnover from self-employment and property exceeded £50,000 in 2024/25, you are in scope from 6 April 2026.
2. Choose MTD-compatible software. HMRC maintains a list of recognised providers. Look for software that bundles bank feeds or PDF-to-CSV import — this saves hours each quarter compared to manual data entry.
3. Move your bookkeeping into digital records. If you currently use paper or a single spreadsheet, you have a few months to migrate. Each transaction must be recorded with date, amount and a category.
4. Test the submission flow. Try a dry run before the first deadline. Authenticating with HMRC through the OAuth flow, mapping accounts and confirming totals all take longer the first time.
5. Talk to your accountant early. If they will be filing for you, they will need agent authorisation under the MTD service — the old 64-8 agent authorisations do not automatically transfer.

Last updated: 28 May 2026. This guide is for general information only and does not constitute tax advice. For decisions about your specific tax position, speak to a qualified accountant or HMRC.