Making Tax Digital for Income Tax (often called MTD for Income Tax or MTD for ITSA) is HMRC’s new way for sole traders and landlords to keep records digitally and report income and expenses to HMRC using compatible software. It is being introduced in phases, starting in April 2026.
This guide explains exactly who is affected, what you must do, and how to get ready, with the key dates you need.
Who must comply from 6 April 2026
From 6 April 2026, you must use Making Tax Digital for Income Tax if your annual income from self-employment and property is over £50,000.
Important: it’s based on your tax return
HMRC uses the tax return you submit for the relevant year to decide when you must join. For the first mandation wave, the key figure is your qualifying income (income from self-employment and property).
Key MTD for Income Tax dates for 2026
If you must join from 6 April 2026, HMRC’s published timeline highlights:
- 6 April 2026 – you must start keeping digital records in MTD-compatible software
- 7 August 2026 – first quarterly update deadline
- 7 November 2026 – second quarterly update deadline
- 7 February 2027 – third quarterly update deadline
- 7 May 2027 – fourth quarterly update deadline
What you must do under MTD for Income Tax
If you are in scope, you (or your accountant/agent) will need to use software that works with MTD for Income Tax to:
- Keep digital records of your business and/or property income and expenses
- Send quarterly updates to HMRC (via software)
- Use the new digital process to complete your year-end position (your software will handle the required submissions)
Quarterly updates: what they are (and what they aren’t)
Quarterly updates are not the same as a “full set of final accounts.” They are regular submissions of income and expense totals, sent through your software to reduce end-of-year pressure and improve visibility across the year. The deadlines above apply for taxpayers starting in April 2026.
Penalties: the first-year easing you should know about
If you are required to use Making Tax Digital for Income Tax from 6 April 2026, HMRC will not apply penalty points for late quarterly updates for the first tax year (2026–2027). However, penalties still apply for late tax returns and late payment of tax due.
This is helpful, but it is not a reason to delay preparation. It is designed to give people a “settling-in” period, not to encourage last-minute changeovers.
How to prepare properly (without last-minute stress)
1) Check whether you are likely to be in scope
If your combined gross income from self-employment and/or property is close to £50,000, treat it as a preparation trigger. HMRC’s threshold is firm for the April 2026 mandation wave.
2) Choose MTD-compatible software early
Your software is not just a bookkeeping tool now. Under MTD for Income Tax it becomes the system through which quarterly updates are sent and your year-end position is finalised. HMRC specifically states you must use software that works with MTD for Income Tax.
3) Fix your record-keeping workflow
Most problems come from messy inputs. Before 6 April 2026, tighten:
- how you store invoices/receipts
- how you categorise expenses
- how you track rental income/allowable costs (if you’re a landlord)
- whether bank feeds and reconciliation are in place
4) Consider joining the programme early (where eligible)
HMRC provides a sign-up route (including for agents registering clients), and has been clear about how penalties work for those mandated from April 2026.
Common questions
“I’m a landlord and a sole trader do I add both incomes together?”
MTD for Income Tax applies based on your income from self-employment and property. If you have both, you should assume HMRC will consider them together for the qualifying income test.
“What if I’m under £50,000?”
MTD for Income Tax is phased. HMRC’s published collection confirms the £50,000 threshold for 6 April 2026 entry. (Later phases apply to lower thresholds.)
“If there’s no penalty points in year one, can I ignore quarterly updates?”
No. HMRC is only pausing penalty points for late quarterly updates in the first year for those mandated from 6 April 2026. The obligation still exists, and other penalties still apply.
Final thoughts
Making Tax Digital for Income Tax is a major operational change, but it becomes straightforward once your software and record-keeping routine are set up properly. If you’re likely to be over £50,000 qualifying income, the smartest move is to get your systems ready well before 6 April 2026, so the switch feels like a process upgrade, not a compliance scramble.
