Sole traders and landlords who are eligible to participate must use digital records and report their tax obligations on a continuous basis through Making Tax Digital, rather than preparing tax records at the end of the tax year.

MTD – Income Tax will become mandatory for the first group of taxpayers starting from 6 April 2026.

What Is MTD for Income Tax?

£23bn missing from total tax revenue!

HMRC has developed a digital reporting mechanism known as MTD – Income Tax, which applies to individuals who have self-employment and/or other property.

Eligible individuals must use compatible accounting software to complete the following:

• Provide HMRC with digitally recorded business income & expenses.

• File quarterly updates with HMRC.

• Submit a yearly income tax return.

• Remit payment of taxes by the applicable due date.

Taxpayers are responsible for selecting compatible accounting software; HMRC does not provide accounting software for use.

Who Needs to Follow the MTD Rules?

MTD will apply to individuals with a total qualifying income [GROSS QUALIFYING INCOME] from self-employment and property greater than £50,000 in 2024/2025 for MTD - effective 6 Apr 26.

The thresholds for joining will decrease in increments as follows:

• From 6 Apr 27, sole traders and landlords with qualifying income [GROSS QUALIFYING INCOME] higher than £30,000 must join MTD.

• From 6 Apr 28, all individuals with qualifying income greater than £20,000 must be registered for MTD.

Qualifying income only includes gross self-employed and property income prior to deduction of allowable expenses, so no employment income, no pensions, and no dividends are taken into account when determining whether you meet the MTD threshold.

When Are Quarterly Updates Due?

In accordance with the standard quarterly deadlines set forth in the 2026–2027 tax year, the following are the dates that must be adhered to:

• 7 August 2026

• 7 November 2026

• 7 February 2027

• 7 May 2027

Your first quarterly report [UPDATE] must be submitted no later than 7 August 2026.

Quarterly reports for 2026–2027 will include a summary of both the income and expenses for each quarter. Income taxes are usually not due every quarter.

Do You Still Submit a Tax Return?

It is true that the annual tax return is not being eliminated under MTD. You must still perform some calculations and declare your income after the expiry of the tax year but before filing by 31 January.

However, it remains necessary to keep the data updated regularly either through a spreadsheet or through more advanced means such as accounting software.

How to Prepare for MTD

Examine your qualifying income, find a compatible software package, and make sure that your bookkeeping is updated on a regular basis.

Regardless of your circumstances surrounding MTD, find the appropriate software and ensure that you file accurate quarterly returns.