Making Tax Digital for Income Tax from April 2026: What You Need to Know (and How to Get Ready)
If you’re self-employed, rent out property, or do a bit of both, you’ve probably seen “MTD” mentioned a lot recently. In plain English, Making Tax Digital (MTD) for Income Tax is a major shift in how some sole traders and landlords will keep records and report income to HMRC.
And in January 2026, this is no longer a distant change. The first mandatory start date is 6 April 2026 for those above the first threshold. GOV.UK+2GOV.UK+2
This guide explains:
- Who needs to use MTD for Income Tax and when
- What “qualifying income” actually means
- What you’ll have to do quarterly (and what you won’t)
- Deadlines, penalties and the “soft landing”
- Software options, including bridging software
- Exemptions (including automatic and temporary exemptions)
- How to prepare without stress
What is Making Tax Digital for Income Tax?
Making Tax Digital for Income Tax is HMRC’s new way for sole traders and landlords to report their self-employment and property income and expenses using MTD-compatible software. GOV.UK+1
Instead of building everything up to a single annual rush, MTD for Income Tax introduces a rhythm:
-
Create and maintain digital records in compatible software. GOV.UK+1
-
Send quarterly updates (summaries) to HMRC for each relevant income source. GOV.UK
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Submit your tax return through your software after the tax year ends (with year-end checks/adjustments completed first). GOV.UK+1
Importantly, MTD for Income Tax does not change how you pay tax or the due dates for payment (it changes reporting and record-keeping). GOV.UK+1
When does MTD for Income Tax start?
MTD for Income Tax is being introduced in phases, based on your qualifying income (more on that below).
The key rollout dates
You’ll be required to use MTD for Income Tax if you’re a sole trader or landlord registered for Self Assessment, and your qualifying income is above the relevant thresholds: GOV.UK+1
- From 6 April 2026 if your qualifying income is over £50,000 (based on the 2024 to 2025 tax year) GOV.UK+2GOV.UK+2
- From 6 April 2027, if your qualifying income is over £30,000 (based on the 2025 to 2026 tax year), GOV.UK+1
- From 6 April 2028, the government has set out plans to bring in those with a qualifying income over £20,000 (based on the 2026 to 2027 tax year). GOV.UK+2GOV.UK+2
Who works out your start date?
HMRC will review your Self Assessment return and, if your qualifying income is over the threshold, they will write to you to confirm you need to start by the start of the upcoming tax year. GOV.UK
However, HMRC’s guidance is clear that it’s still your responsibility to check whether you need to use MTD for Income Tax and make sure you’re signed up in time (even if you do not receive a letter). GOV.UK
Also worth noting: HMRC will not automatically enrol you for MTD for Income Tax, so if you’re in scope, you need to take action. Making tax digital for Income Tax
What is “qualifying income” (and why it catches people out)?
This is the part that often causes confusion.
Qualifying income is your total gross income (turnover) from self-employment and property in a tax year — before deducting expenses or taxes. GOV.UK+1
That means it’s not your profit, and it’s not your “take-home”. It’s the top-line figure.
What counts towards qualifying income?
- Self-employment gross income (sole trade turnover) GOV.UK+1
- Property gross income (including rent and certain other property receipts) GOV.UK+1
What does NOT count?
Other income sources are not included in qualifying income, such as:
- Employment income (PAYE)
- Partnership income
- Dividends (including dividends from your own company) GOV.UK+1
Example: why this matters
If you’re a landlord with:
- £42,000 gross rent
- £12,000 gross self-employment turnover (side business)
Your qualifying income is £54,000 (not your profit), so you may be required to start from 6 April 2026 depending on the relevant tax-year test. GOV.UK+1
This is exactly why planning early matters — you do not want to discover you’re in scope when April arrives.
What changes under MTD for Income Tax?
MTD for Income Tax isn’t just “filing your tax return online” (you can already do that). It introduces digital record keeping and quarterly reporting.
1) You must keep digital records in compatible software
A digital record is one created and stored in software that works with MTD for Income Tax. GOV.UK+1
HMRC’s guidance says you need digital records for self-employment and property income/expenses and, when you create those records, you typically record the:
- Amount
- Date the income was received or the expense incurred
- Category (aligned to Self Assessment categories) GOV.UK
If you have more than one self-employment business, you generally need separate records and separate quarterly updates for each business. GOV.UK+1
2) You send quarterly updates (summaries) to HMRC
Every 3 months, your compatible software pulls together your digital records and produces totals for each relevant income and expense category. GOV.UK
A few points that reduce anxiety for many people:
- You do not need to make accounting or tax adjustments before sending a quarterly update. GOV.UK
- HMRC receives totals, not your individual transactions/line-by-line details. GOV.UK
- Even if you had no income or expenses in the period, you still need to send an update to tell HMRC. GOV.UK
- Quarterly updates cover the last 3 months plus the records since the start of the tax year (including corrections), so you can fix errors without “resending” the earlier update. GOV.UK
- After an update, you can usually see an estimate of your tax bill for your self-employment/property income in your software or online account. GOV.UK
3) You still submit a tax return (through your software)
After the tax year ends, once you’ve made the required year-end adjustments, you submit your tax return through your MTD-compatible software. GOV.UK+1
Your software must also be able to handle bringing in or reporting your other income sources for the year (even though they are not part of qualifying income). GOV.UK+1
And again: MTD for Income Tax does not change the way you pay tax or the dates payments are due. GOV.UK+1
Quarterly update deadlines (the dates to put in your diary)
HMRC provides standard update periods aligned with the tax year (6 April to 5 April) and also calendar update periods ending on the last day of a month, which can help if your accounting period does not match the tax year. GOV.UK
Standard update periods and deadlines
For the standard tax-year aligned quarters, the deadlines are: GOV.UK
| Update period | Deadline |
|---|---|
| 6 April to 5 July | 7 August |
| 6 April to 5 October | 7 November |
| 6 April to 5 January | 7 February |
| 6 April to 5 April | 7 May |
If your software supports it, you may choose calendar update periods (for example, 1 April to 30 June), but the deadlines remain the same. GOV.UK
Penalties: What happens if you miss a deadline?
This is often the question people type into Google late at night.
If you miss a quarterly update deadline
HMRC’s guidance says late quarterly updates may lead to late submission penalties when you’re required to use MTD for Income Tax. GOV.UK
However, there are important “soft landing” points:
- If you’re volunteering/testing, these penalties do not apply. GOV.UK+1
- If you need to use MTD for Income Tax from 6 April 2026, HMRC says it will not apply penalty points for late quarterly updates for the first 12 months (penalty points still apply for late tax returns). GOV.UK
If you miss the tax return deadline
Late submission penalty points can apply if you miss the tax return deadline. GOV.UK+1
So even though quarterly reporting becomes more regular, the year-end compliance still matters.
Exemptions: Who does not need to use MTD for Income Tax?
Not everyone will be required (or able) to join straight away, and there are several types of exemptions.
HMRC describes:
- Permanent exemptions and temporary exemptions
- Some exemptions are automatic, and some require an application. GOV.UK+1
Digital exclusion
You may be able to apply for an exemption if you are “digitally excluded” — meaning it’s not reasonable for you to use compatible software to keep digital records and submit updates/returns. GOV.UK+1
HMRC also makes clear it will not accept an exemption application if your only reason is, for example:
- You previously filed a paper return,
- You’re unfamiliar with accountancy software,
- It will cost time or money to sign up/use MTD. GOV.UK
Automatic exemptions (examples)
HMRC lists several circumstances where you are automatically exempt and cannot sign up (for example, if you do not have a National Insurance number, or you file as certain types of trustee/personal representative). GOV.UK
Temporary exemptions (examples)
HMRC guidance also includes temporary exemptions, including cases where certain reliefs or supplementary pages apply (for example, some situations involving averaging relief, qualifying care relief, trusts/estates, or SA109 circumstances). GOV.UK
If there’s any doubt here, it’s worth checking carefully because exemption rules can be specific.
Software: what you need (and what your options are)
The headline is simple: you will need software that works with Making Tax Digital for Income Tax to:
- create/store/correct digital records,
- send quarterly updates,
- submit the tax return. GOV.UK+2GOV.UK+2
Two common software approaches
HMRC explains you can choose software that:
- creates digital records, or
- connects to your existing records (bridging software). GOV.UK
This matters because many people already keep records in spreadsheets. Bridging software can be the difference between “start from scratch” and “adapt what you already do”.
Authorising software (and a detail many people miss)
Once you sign up, your software must be connected/authorised with HMRC via your Government Gateway. HMRC’s guidance also notes you’ll need to renew this connection every 18 months and your software should remind you. GOV.UK
Choosing the right software
HMRC provides tools and guidance to help you find software that meets your needs and supports your relevant income sources (self-employment, UK property, foreign property, plus reporting other income for the tax return). GOV.UK+1
Agents and bookkeeping support: what can be delegated?
Many people will not want to do every MTD step themselves (and they don’t have to).
HMRC’s guidance explains that an agent can help with some or all tasks, including:
- signing up
- creating/storing digital records
- sending quarterly updates
- submitting the tax return after the year-end GOV.UK
It also recognises that you can have more than one agent (for example, a bookkeeper as a supporting agent and an accountant as a main agent, depending on the role). GOV.UK
This is often the cleanest setup in practice:
- Bookkeeper keeps records tidy and sends quarterly updates
- Accountant reviews year-end position, adjustments and tax return submission
If you’re VAT registered: MTD may already apply to you (but Income Tax is different)
If you run a VAT-registered business, you may already be under MTD for VAT.
HMRC’s position is that all VAT-registered businesses should now keep VAT records and submit VAT Returns using compatible software, and new VAT-registered businesses are signed up automatically unless exempt. GOV.UK
VAT Notice 700/22 explains MTD for VAT requires VAT-registered businesses to keep records digitally and file VAT returns using software that can maintain required records, prepare returns, and communicate with HMRC via an API. GOV.UK
VAT exemption (for context)
There is also a separate exemption process for MTD for VAT if it’s not reasonable/practical to use computers/software/internet, including reasons such as age, disability, health condition, religious objection, or lack of internet access. GOV.UK
The key point
Even if you’re already “digital for VAT”, MTD for Income Tax adds new obligations (quarterly income tax updates and the MTD Income Tax process). It’s not just a VAT admin tweak.
Practical steps to get ready before April 2026
If you might be in the first wave (6 April 2026), a calm approach is to work through preparation in a logical order.
1) Confirm whether you’re in scope (and when)
Use HMRC’s eligibility guidance and tools to check whether you need to start using MTD for Income Tax and when. GOV.UK+2GOV.UK+2
Remember: qualifying income is gross self-employment + property income. GOV.UK+1
2) Decide how you want to keep records
Do you want to:
- move to a full bookkeeping package (bank feed, receipt capture, etc.), or
- keep your current approach and use bridging software? GOV.UK+1
3) Set up categories properly from the start
MTD for Income Tax uses the same categories of income and expenses as Self Assessment. GOV.UK
This is a big deal. Getting your categories right early saves hours later and improves the accuracy of quarterly estimates.
4) Build a quarterly routine (small and regular beats “big and painful”)
Quarterly updates are built from your digital records. You don’t need tax adjustments at that point, but your records should reflect what actually happened in the period. GOV.UK
Most stress comes from trying to do “a quarter’s worth of bookkeeping” the day before a deadline. A monthly habit is usually easier.
5) Get support lined up
If you want help, talk to your accountant/bookkeeper early so everyone is aligned on:
- who is responsible for what,
- what software will be used,
- whether you’ll use main/supporting agent arrangements. GOV.UK+1
Common MTD pain points (and how to avoid them)
“I thought it was based on profit, not turnover”
It’s based on gross income from self-employment and property, not profit. GOV.UK+1
“I’ve got a job too — does that push me over?”
PAYE income is not included in qualifying income for MTD for Income Tax. GOV.UK+1
“I have more than one business”
You may need separate records and quarterly updates for each self-employment source. GOV.UK+1
“I jointly let a property — do I have to report everything quarterly?”
HMRC guidance allows choices for jointly let properties in quarterly updates (for example, including income and expenses or income without expenses), with certain items reported at year end. GOV.UK
“Will this change how much tax I pay?”
MTD for Income Tax is designed to change how you keep records and report, not the payment dates. HMRC states it does not change the way you pay tax or when payments are due. GOV.UK+1
Frequently asked questions
Does MTD for Income Tax apply to limited companies?
MTD for Income Tax is aimed at sole traders and landlords; HMRC’s campaign guidance explicitly says limited companies do not have to use this (though they may already use MTD for VAT if VAT registered). Making tax digital for Income Tax+1
Do partnerships have to use MTD for Income Tax?
HMRC policy notes the government remains committed to introducing MTD for Income Tax to partnerships in the future, with a timeline to be set later. GOV.UK+2GOV.UK+2
Can I use spreadsheets?
HMRC guidance recognises “bridging software” that connects to existing records as a valid route, depending on your setup and the software chosen. GOV.UK+1
Do I still submit a tax return?
Yes — HMRC guidance describes completing and submitting your tax return through MTD-compatible software. GOV.UK+1
What are the quarterly deadlines again?
For standard tax-year periods: 7 August, 7 November, 7 February and 7 May (with the periods specified earlier). GOV.UK
Want to make sure you’re ready for April 2026?
If you’re unsure whether you’ll fall into the first wave, or you’d like a clear plan for software, record-keeping and quarterly submissions, we can help you get set up properly and avoid last-minute surprises.
Book a free 30-minute call with Merranti Accounting and we’ll:
- confirm whether MTD for Income Tax applies to you (and from when),
- Talk through the most straightforward software/record-keeping route for your situation,
- Outline how we can support you (from bookkeeping through to quarterly updates and the year-end tax return
