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Tax year 2026/27  ·  Bank of England base rate 3.75%

Making Tax Digital for Income Tax: Who's In, From When, and What Actually Changes

By The Money Calculator Team · Updated 8 August 2026 · 6 min read
The short version: from April 2026, sole traders and landlords with combined gross income over £50,000 must keep digital records and send HMRC quarterly updates through software, with the threshold falling to £30,000 in 2027 and £20,000 in 2028. The tax you pay and the 31 January payment date don't change — the filing rhythm does. Check your own date and first-year deadlines with the MTD checker.
First wave starts
Apr 2026
Filings a year
4 + 1
Change to the tax bill
£0

Making Tax Digital for Income Tax is the biggest change to Self Assessment since Self Assessment itself. It has been postponed so many times that plenty of sole traders and landlords have stopped believing in it — but the first mandation date is now real, legislated, and months away. Here is who is caught, when, and what day-to-day life looks like inside it.

The timetable: three waves, by gross income

Whether MTD applies to you depends on your qualifying income: your self-employment turnover plus your gross property income, added together, before any expenses. Employment income, pensions, dividends and savings interest don't count at all.

> £50,000> £30,000> £20,000 April 2026April 2027April 2028 judged on 2024/25judged on 2025/26judged on 2026/27 Combined gross self-employment + property income

Each wave is judged on the tax return filed two years earlier — so the April 2026 group is decided by the 2024/25 return being filed by this coming January. Below £20,000, no start date has been set.

Gross means gross — the trap in the test

The thresholds bite on turnover, not profit. A landlord collecting £55,000 of rent with £30,000 of mortgage interest and costs has £25,000 of profit — and is in the first wave anyway. A sole trader with £40,000 of sales and a £12,000-a-year rental property clears £50,000 combined and joins in 2026. This is the single most misunderstood part of the rules, and it is why people with modest profits keep discovering they are caught. Two minutes with the checker settles it for your own numbers.

What life inside MTD looks like

Once mandated, you keep your business records digitally and send HMRC an update each quarter through MTD-compatible software, plus a final return. For the first wave, year one runs like this:

FilingCoversDeadline
Quarterly update 16 Apr – 5 Jul 20267 Aug 2026
Quarterly update 26 Apr – 5 Oct 20267 Nov 2026
Quarterly update 36 Apr – 5 Jan 20277 Feb 2027
Quarterly update 46 Apr 2026 – 5 Apr 20277 May 2027
Final tax returnThe 2026/27 year, finalised31 Jan 2028

Two features make this less fearsome than it sounds. The updates are cumulative — each one re-sends the year so far, so a mistake in the summer is simply corrected in the autumn, with no amendment process. And they are summaries of totals, not transaction-by-transaction filings; if your records are in order, an update is close to a button-press. The updates don't even need to be accurate to the penny — the accounting adjustments all happen in the final return, as now.

MTD doesn't change what you owe or when you pay it. It changes how often HMRC hears from you — from once a year to five times.

What it costs, and what you get back

The real cost is the shift itself: software (bridging tools that connect a spreadsheet count, and free tiers exist for simple affairs), a tidier record-keeping habit, and either your time each quarter or your accountant's. The compensation is genuine: quarterly figures mean you see your tax position building through the year, which makes January's bill — and the payments on account that come with it — far less of an ambush. Missed deadlines earn penalty points rather than instant fines, with a £200 charge only once four points accumulate.

How to get ready

Worth doing this year

  • Check your date against your gross income — including the rent
  • Separate business banking — digital records start with clean feeds
  • Pick software early — or ask your accountant what they'll use
  • Consider joining voluntarily a year early to rehearse without penalties

Not worth worrying about

  • Your PAYE job, dividends or savings — none of it counts
  • Paying tax more often — payment dates are unchanged
  • Penny-perfect quarters — adjustments happen in the final return
  • Partnerships and companies — not in scope, no dates announced

The bottom line

If your gross self-employment and property income clears £50,000, your MTD life starts in April 2026 and your first deadline is 7 August 2026. If it clears £30,000 or £20,000, you have one or two more years — which is exactly the time to get the records habit in place cheaply. The rules reward the prepared and penalise the surprised, and for once the preparation is genuinely simple.

Find your start date and your first-year deadlines in 30 seconds
Use the MTD checker →

Common questions

Do partnerships or limited companies have to use MTD for Income Tax?
No. MTD for Income Tax covers individuals with self-employment or property income. General partnerships are due to be brought in at a later stage but no start date has been announced, and limited companies file Corporation Tax returns instead — MTD for Corporation Tax also has no start date.
What happens if I miss a quarterly update?
Late submissions earn penalty points rather than instant fines — one point per missed deadline, and a £200 penalty once you reach four points as a quarterly filer. Points expire after a period of full compliance. Paying the tax itself late is penalised separately, so the update deadlines and the 31 January payment date both matter.
Can my accountant do the quarterly updates for me?
Yes — agents can keep the digital records and submit every update and the final return on your behalf, exactly as many do for VAT today. The records still have to be kept digitally somewhere in the chain, so the practical change is sending your accountant figures little and often rather than in one January shoebox.
Does MTD change how much tax I pay, or when?
No. The tax rules, the 31 January balancing payment and payments on account are all unchanged. MTD changes the record-keeping and the filing rhythm, not the bill — though seeing your position quarterly makes the January number far less of a surprise.

Sources

GOV.UK — Find out if and when you need to use Making Tax Digital for Income Tax, LITRG — When does Making Tax Digital start for me? and ICAEW — TAXguide: MTD income tax. See our full methodology and rates.

MC
The Money Calculator Team
Research & Editorial
Written and reviewed by our editorial team · fact-checked against current HMRC and GOV.UK guidance

These guides are written and maintained by the team behind The Money Calculator — the same people who build the calculators on this site. We aim to explain UK tax and personal finance in plain English and check every figure against current HMRC and government guidance before publishing. This is general information to help you weigh your options, not personal financial advice.

This article is general information for the 2026/27 tax year and not personalised financial advice. MTD rules and dates are set by HMRC and can change — verify your own position against GOV.UK before making decisions.

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