Tax & Compliance · UK

Making Tax Digital for Income Tax Starts April 2026. Are You Ready?

⚠️ Key Deadline: Making Tax Digital (MTD) for Income Tax becomes mandatory from 6 April 2026 for sole traders and landlords with qualifying income over £50,000. If you have not yet prepared, the time to act is now.

The UK tax system is going through its biggest change in decades. Making Tax Digital for Income Tax is a permanent shift in how self-employed people and landlords report their earnings to HMRC. Quarterly updates will be required during the year, followed by an end-of-year final declaration replacing the current Self Assessment submission.

At Fingdom, our team has helped hundreds of clients through every major tax change. In this guide, we explain exactly what MTD for Income Tax means, who it applies to, and what you need to do before the April 2026 deadline.

What Is Making Tax Digital for Income Tax?

Making Tax Digital for Income Tax, also known as MTD for ITSA (Income Tax Self Assessment), is a new HMRC requirement. It means that self-employed people and landlords must keep digital records of their income and expenses, and send quarterly summaries to HMRC through approved software.

The aim is to make the tax system more accurate and efficient. It also reduces the errors that often occur with a single annual return filed months after the tax year ends.

Who Is Affected and When?

MTD for Income Tax is being rolled out in stages. It is based on your qualifying income, which is your total gross turnover from self-employment, rental property, or both. This figure is calculated before deducting any expenses.

Important: Qualifying income is your total gross receipts, not your profit. Income from PAYE employment, dividends, pensions, and investments does not count towards this threshold. Partnerships will also be required to join MTD in the future, though HMRC has not yet confirmed the exact timeline.

What Exactly Changes for You?

1. Digital Record Keeping

From April 2026, spreadsheets can still be used, but must connect to HMRC via compatible bridging software. You will need to use HMRC-approved software to record every transaction digitally as you go. If you prefer to keep working with spreadsheets, bridging software is available to connect them to HMRC’s systems.

2. Quarterly Submissions to HMRC

Rather than filing one tax return per year, you will send a summary of your income and expenses to HMRC four times a year. The submission deadlines for the 2026/27 tax year are:

• Quarter 1: 6 April to 5 July 2026, submit by 7 August 2026
• Quarter 2: 6 July to 5 October 2026, submit by 7 November 2026
• Quarter 3: 6 October 2026 to 5 January 2027, submit by 7 February 2027
• Quarter 4: 6 January to 5 April 2027, submit by 7 May 2027

3. Final Declaration at Year End

After the tax year ends, you still need to submit a Final Declaration to confirm your total income, claim any allowances, and finalise your tax bill. The deadline for this remains 31 January, which is the same as the current Self Assessment deadline.

⚠️ New Points-Based Late Submission Penalties

HMRC is replacing the old fixed late filing fines with a points-based system. Every time you miss a quarterly submission deadline, you receive one penalty point. Once your points reach a set level, a £200 financial penalty is issued. Points reset once you return to full compliance.

Good news for new starters: HMRC has confirmed a penalty easement for late quarterly updates in the first year, allowing taxpayers time to adapt. This gives new MTD users time to settle into the process without the immediate risk of financial penaltie.

✅ Who May Be Exempt from MTD?

• Some taxpayers can apply for, or automatically receive, an exemption from MTD for Income Tax:
• People who are digitally excluded due to age, disability, remote location, or religious belief
• Those without a National Insurance number
• Trustees
• People who used the SA109 supplementary pages in their 2024/25 tax return (mainly non-UK residents), deferred until April 2027
• Those who claimed averaging relief or qualifying care relief, also deferred until April 2027

Some exemptions are granted automatically. Others need a formal application to HMRC. Check your exemption status on GOV.UK.

How to Get Ready for MTD: 4 Simple Steps

1
Check whether you are in scope

Look at your gross income from self-employment and rental property for the 2024/25 tax year. If the total is above £50,000, you must be signed up and compliant from 6 April 2026. Use HMRC’s free online eligibility tool to confirm your status.

2
Choose the right software

Pick an HMRC-approved product such as Xero, QuickBooks, or Sage. If you prefer to keep using spreadsheets, bridging software is available. Your chosen software must handle digital record keeping, quarterly submissions, and the final declaration.

3
Sign up for MTD with HMRC

You need to be registered for Self Assessment and have filed a return in the last two years before signing up. Complete this on GOV.UK before 6 April 2026. Your accountant can handle the sign-up for you if you prefer.

4
Work with a qualified accountant

An accountant can take care of the whole process for you. This includes software setup, quarterly submissions, and the year-end final declaration, so you stay fully compliant without the stress of managing it alone.

Final Thoughts

Making Tax Digital for Income Tax is not optional. If your qualifying income was over £50,000 in the 2024/25 tax year, you are legally required to comply from 6 April 2026. Leaving it too late increases your risk of penalties, poor software choices, and unnecessary pressure.
With the right support and the right software in place, the process is far more manageable than it sounds. Submitting quarterly updates also means you always know where you stand with your taxes throughout the year, so there are no surprises come January.

Not Sure Where to Start? Fingdom Can Handle It for You.

Our team of accountants specialise in Personal Tax, Virtual Accounting, and full MTD compliance for sole traders and landlords across the UK. We will check your eligibility, set up the right software, and manage every quarterly submission so you never miss a deadline.

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Fingdom Financial Consultants Ltd
Chartered Accountant · 140 High Road, South Woodford, London E18 2QS · info@fingdom.uk · fingdom.uk