Making Tax Digital for Income Tax (MTD) changes how sole traders and landlords report to HMRC. You keep digital records, send HMRC a summary of your income and expenses every quarter, and then file your tax return through the same software. It has been phased in by income since 6 April 2026.
When you join
HMRC looks at your qualifying income: your gross income from self-employment and from property, added together, before any expenses. It reads the figure from the tax return for the year two years before the start date, because that’s the latest return it has.
| Qualifying income | In the tax year | You must use MTD from |
|---|---|---|
| Over £50,000 | 2024/25 | 6 April 2026 |
| Over £30,000 | 2025/26 | 6 April 2027 |
| Over £20,000 | 2026/27 | 6 April 2028 |
You can also join voluntarily before your date.
Some people can apply for an exemption, for example where age, disability or where you live makes using software impractical, and some types of income are outside MTD altogether. gov.uk’s eligibility checker covers the details.
What you have to send
Each quarter you send HMRC the running totals of your income and expenses for the year so far, by category. The quarters follow the tax year unless you elect calendar quarters, and each update is due a month and two days after the quarter ends:
| Quarter | Covers | Due by |
|---|---|---|
| 1 | 6 April to 5 July | 7 August |
| 2 | 6 July to 5 October | 7 November |
| 3 | 6 October to 5 January | 7 February |
| 4 | 6 January to 5 April | 7 May |
Each update covers the year so far, from the start of the tax year to the end of that quarter, so a mistake in one quarter is simply corrected in the next. No tax is paid at that point. After the fourth update you complete and submit your tax return in the software, by 31 January after the tax year ends: it adds any other income, claims allowances such as the trading allowance, and works out the tax. The payment dates don’t change: 31 January, with payments on account on 31 January and 31 July if they apply.
For 2026/27, the first year, HMRC is not applying penalty points for late quarterly updates, though you still have to send them all before you can submit the tax return. For later tax years each missed deadline earns a penalty point, and four points bring a £200 penalty.
Records and software
MTD requires digital records: each sale and expense recorded in software, or in a spreadsheet, rather than on paper. A spreadsheet counts, provided the totals reach HMRC through bridging software with a digital link, meaning no retyping between the two. HMRC keeps a list of recognised software, and that list shows which of the bridging tools are free.
What the spreadsheet does
The Sole Trader Bookkeeping spreadsheet records income and expenses in HMRC’s categories, and its MTD Quarters tab totals them for each quarter with the deadline next to it. Anything dated outside the tax year is flagged rather than silently included. It can’t send anything to HMRC on its own, and it says so on the tab: the totals are there to be picked up by bridging software that links to or imports the spreadsheet. HMRC requires a digital link, so the figures are transferred, not re-typed.
If you’re not in MTD yet, the same file still does the job for your ordinary Self Assessment return, and the quarterly view is a useful habit to start before it becomes compulsory.
Questions people ask
I earn £40,000 from self-employment and £15,000 in rent. Am I in?
If those were your 2024/25 figures, yes, from 6 April 2026. Qualifying income adds self-employment and property income together, before expenses, so £55,000 is over the £50,000 threshold.
Is qualifying income before or after expenses?
Before. It is your gross turnover from self-employment plus gross rents, not your profit. Income from employment, pensions, dividends and savings doesn't count towards it.
Do I still send a Self Assessment tax return?
Yes, but through your Making Tax Digital software rather than HMRC's online form. You send four quarterly updates during the year, then complete and submit the tax return in the software by 31 January after the tax year ends.
Can a spreadsheet send my quarterly updates?
Not on its own. HMRC allows spreadsheet records if you use bridging software to send the totals, with a digital link between the two. The spreadsheet holds the records and the quarterly totals; the bridging software does the sending.
Sources
- gov.uk: Check if you're eligible for Making Tax Digital for Income Tax (updated 26 March 2026). Checked 29 September 2026.
- gov.uk: Use Making Tax Digital for Income Tax (send quarterly updates; submit your tax return). Checked 3 October 2026.
- gov.uk: Penalties for Making Tax Digital for Income Tax. Checked 3 October 2026.
- gov.uk: Find software that's compatible with Making Tax Digital for Income Tax.
This is general information, not tax advice. Figures are as published on gov.uk on the date shown and can change. Check them, or ask an accountant, before you rely on them.