If your qualifying income from self-employment and/or property is above £50,000, Making Tax Digital for Income Tax (MTD for Income Tax) has applied from 6 April 2026. This is no longer a distant change. If you are in scope, you need to keep digital records, use compatible software and send quarterly updates to HMRC.

The earlier you get your records, software and process in place, the easier it will be to stay compliant throughout the year.

This guide covers what MTD for Income Tax means in practice, who it applies to, what you need to do, and how to avoid the mistakes that catch many people out.

What Is Making Tax Digital for Income Tax?

Making Tax Digital for Income Tax is HMRC’s programme for changing how sole traders and landlords report income and expenses. Instead of pulling everything together once a year in January, you keep digital records throughout the tax year and send quarterly updates to HMRC using compatible software.

The quarterly updates are not full tax returns. They are summaries of your income and expenses for each quarter. At the end of the tax year, you still need to finalise your position, include any other relevant income, reliefs or adjustments, and submit your tax return using compatible software.

The goal from HMRC’s perspective is to reduce errors, improve compliance and give taxpayers a clearer view of their estimated tax position during the year. Whether you welcome the change or not, compliance is mandatory once you are in scope.

If you are still getting to grips with how self-assessment for sole traders works alongside this, that is a helpful starting point before diving into the mechanics of MTD.

Who Does MTD for Income Tax Apply To?

The rollout is being phased in by qualifying income threshold. Here is the current schedule:

Combined Qualifying Income From Self-Employment and/or Property	Start Date
Over £50,000	6 April 2026
Over £30,000	6 April 2027
Over £20,000	6 April 2028

The threshold is based on total gross qualifying income from self-employment and property before expenses are deducted. So if you earn £30,000 from your trade and £22,000 in rental income, your combined qualifying income is £52,000, which puts you in scope from 6 April 2026.

HMRC normally assesses whether you are in scope by reviewing your Self Assessment tax return. For the first MTD phase, that means HMRC looks at your 2024 to 2025 tax return to decide whether you must use MTD for Income Tax from 6 April 2026.

If HMRC believes you are in scope, it should write to you. However, you are still responsible for checking whether you need to sign up, even if you have not received a letter.

Partnerships and limited companies are not included in the current phase. If you have been wondering whether it might make sense to incorporate, our guide on moving from a sole trader to limited company is worth reading alongside this.

For a broader overview of how income is taxed in England, Wales and Northern Ireland, our post on income tax bands in England, Wales and Northern Ireland gives a clear breakdown of the current rates.

Your Three Core Obligations Under MTD for Income Tax

Once you are in scope, there are three main things you need to do.

Keep digital records

You must record your income and expenses digitally using software that is compatible with HMRC’s MTD for Income Tax service. Paper records and basic spreadsheets on their own do not meet the requirement. You will need either cloud accounting software or a spreadsheet paired with compatible bridging software.

Submit quarterly updates

You send a summary of your income and expenses to HMRC 4 times during the tax year. These updates give HMRC an in-year view of your figures and help your software provide an estimated tax position.

Submit your tax return

After the end of the tax year, you use compatible software to finalise your figures, add any other income, reliefs or adjustments, and submit your tax return by the usual 31 January deadline.

Our dedicated post on MTD for Income Tax covers the full process in more detail if you want a deeper look.

Key Quarterly Deadlines You Need to Know

One of the most important things to understand is the quarterly submission calendar.

Quarter	Period	Submission Deadline
Quarter 1	6 April to 5 July	7 August
Quarter 2	6 July to 5 October	7 November
Quarter 3	6 October to 5 January	7 February
Quarter 4	6 January to 5 April	7 May
Tax return	Full tax year	31 January

For the 2026 to 2027 tax year, HMRC has confirmed that penalty points will not be applied for late quarterly updates for people required to use MTD from 6 April 2026. However, you still need to send your quarterly updates before you can submit your tax return.

Penalties can still apply for late tax returns and late payment of tax. From later years, late quarterly updates are expected to fall under the points-based penalty system, where repeated missed deadlines can lead to a £200 penalty once the relevant threshold is reached.

Our post on late tax returns and penalties explains how tax penalties work and what you can do to avoid them. For a closer look at the full MTD timeline and how quarterly updates fit into the tax year, our post on MTD timelines and quarterly updates is the one to read.

What Software Do You Need?

You can only use software that is compatible with HMRC’s MTD for Income Tax service. There are 2 main routes.

Cloud accounting software connects directly to HMRC and can automate much of the submission process. It is generally the most straightforward option because your records, categorisation and submissions can sit in one place. As a QuickBooks accountant, Asmat & Co Accountants works with QuickBooks daily and can get you set up and submitting without the technical headaches.

Bridging software works alongside your existing spreadsheet, translating your data into the format HMRC requires. It can be a good option if you are comfortable with Excel and do not want to change your records system. Our post on bridging software vs cloud accounting explains the differences in plain terms.

If you are still weighing up your options, our MTD software shortlist for small businesses covers the most practical choices currently available.

Why Your Bookkeeping Needs to Change

MTD does not just change when you file. It changes how you manage your finances throughout the year. Under the old annual system, many sole traders and landlords would gather everything together in December or January and hope for the best. That approach does not work well under MTD.

To submit accurate quarterly updates on time, your records need to be current and correctly organised month by month. Proper bookkeeping services make this manageable. If your records are already behind, our post on what to do if your bookkeeping is behind gives a practical step-by-step plan for catching up quickly.

For those thinking about how ongoing bookkeeping works in practice with a professional, our post on monthly bookkeeping with an online accountant is well worth a read.

What Landlords Need to Know

If you earn property income, MTD for Income Tax can apply to your rental figures in the same way it applies to self-employment income. You will need to keep digital records of your rental income and allowable expenses and include these in your quarterly updates.

Common allowable expenses for landlords include letting agent fees, repairs and maintenance, insurance, accountancy costs and other costs incurred wholly and exclusively for the rental business. Mortgage interest is treated differently for individual landlords because of the finance cost restriction, so it is important to categorise it correctly.

Our guide to rental income and expenses covers what you can and cannot claim in detail.

If you earn rental income through a limited company structure, MTD for Income Tax does not apply to the company directly. Our post on how to set up a buy-to-let company explains how that structure works and the tax implications involved.

For a broader look at managing your property finances, our landlord accounting guide is a comprehensive starting point.

What Sole Traders Need to Know

If you are self-employed, MTD for Income Tax applies to your trading income once you are above the relevant qualifying income threshold. You need to record all sales and business expenses digitally and include these in each quarterly update.

If you have not yet formally registered as self-employed with HMRC, our post on registering as self-employed in the UK covers the process clearly. And if you are wondering whether cash basis or traditional accounting suits your business better, our post on cash basis vs traditional accounting breaks down the key differences.

Working with proper sole trader accounting services means someone is staying on top of your records, software and deadlines, so nothing falls through the cracks.

Common MTD Mistakes to Avoid

Our post on MTD pitfalls and common mistakes covers 10 errors that regularly trip people up. The most important ones to be aware of are:

• Using software that is not actually HMRC-compatible and assuming it is fine
• Forgetting to sign up for MTD with HMRC before you start submitting
• Treating quarterly updates as full tax returns and over-complicating them
• Not separating personal and business transactions in your records
• Assuming you can wait for an HMRC letter before checking whether you are in scope
• Leaving the year-end tax return process until late January with insufficient records prepared

How MTD for Income Tax Relates to MTD for VAT

If you are VAT-registered, you may already be familiar with digital records and VAT return submissions through MTD for VAT. MTD for VAT was introduced from April 2019 for VAT-registered businesses above the VAT threshold and was extended to all VAT-registered businesses from April 2022.

MTD for Income Tax is a separate obligation covering your self-employment and property income. If you are VAT-registered and also in scope for MTD for Income Tax, the 2 systems run alongside each other. Our post on MTD for VAT is a useful read if you want to understand how both systems interact.

If you need help managing your vat returns services alongside your MTD for Income Tax obligations, our team handles both.

How Asmat & Co Accountants Can Help

MTD for Income Tax is a significant administrative change, but with the right support it becomes routine fairly quickly. As experienced accountants in Slough with nearly 2 decades of working with sole traders and landlords, we understand the practical side of this far better than most.

We handle your software setup, quarterly updates and year-end tax return process. We can also provide financial reporting services so you have a clear picture of how your finances are performing throughout the year, not just at tax time.

Whether you are looking for small business accountants or support as an individual landlord, our approach is the same: transparent pricing, a dedicated accountant and a guaranteed 3-hour response time.

If you are based outside Slough, our accountants in Reading team offers the same level of service across Berkshire.

If you are thinking about switching from another accountant, our post on onboarding with an online accountant explains how the transition works and what to expect.

Frequently Asked Questions

Do I need to register for MTD for Income Tax myself?

Yes. You can sign up through your HMRC Government Gateway account, or your accountant can do it on your behalf as your authorised agent. HMRC has been writing to people it believes are in scope, but you should not rely only on receiving a letter. If your qualifying income is above the relevant threshold, you should check your position and sign up when required.

What if I miss a quarterly deadline?

For the 2026 to 2027 tax year, HMRC will not apply penalty points for late quarterly updates if you were required to use MTD from 6 April 2026. However, you still need to send your quarterly updates before you can submit your tax return. Penalties can still apply if your tax return is late or your tax bill is paid late.

Does the year-end submission replace my Self Assessment tax return?

You still need to submit a tax return. The difference is that, under MTD, you use compatible software to finalise your business and/or property income, add any other relevant income, reliefs and adjustments, and submit your tax return by 31 January. Your tax return accountant can handle this on your behalf.

I have both self-employment income and rental income. Do they count separately?

No. HMRC combines both when assessing your qualifying income. If your total gross qualifying income from self-employment and property exceeds £50,000, you are in scope from 6 April 2026, unless an exemption applies.

Can I still use spreadsheets?

You can, but spreadsheets must be used with compatible bridging software that allows you to submit the required information to HMRC. Many people find cloud accounting software like QuickBooks simpler to manage, especially once quarterly deadlines become routine.

What happens if HMRC opens an enquiry based on my MTD submissions?

Having an accountant managing your submissions significantly reduces the likelihood of errors that trigger an enquiry. If one does arise, our post on how an accountant supports you through HMRC enquiries explains what the process looks like and how we help.

Is it worth choosing an accountant who specialises in MTD?

It makes a real difference. MTD affects your software, bookkeeping rhythm, quarterly updates and year-end tax return process. Our post on choosing the right accountant covers what to look for and the questions worth asking before you sign anything.

I have not yet registered as self-employed. Does MTD still apply to me?

You need to be registered with HMRC as self-employed before reporting self-employment income properly. Our post on registering as self-employed in the UK covers that first step.

Get MTD-Ready With Asmat & Co Accountants

MTD for Income Tax does not have to be as complicated as it sounds. The key is having the right software in place, keeping your records current and submitting on time. Everything else flows from that.

If you are in scope and have not yet signed up, chosen your software or put a plan in place, now is the time to act. Our team at Asmat & Co Accountants will get you set up, handle your quarterly updates and deal with your tax return at year end so you can get on with running your business.

Get in touch with us today and let us take the admin off your plate.