Making Tax Digital (MTD) for Income Tax is now a reality for hundreds of thousands of sole traders and landlords, with more businesses coming under the rules from April 2027. If you already use MTD for Income Tax, the next key date is 7 November 2026, when the second quarterly update is due.

Who currently needs to use Making Tax Digital?

From 6 April 2026, MTD for Income Tax became mandatory for sole traders and landlords with qualifying income over £50,000.

Qualifying income is the combined gross income you receive from self-employment and property before expenses are deducted.

Under MTD, those affected must keep digital records and use compatible software to send quarterly updates to HMRC. These quarterly updates summarise your income and expenses and do not replace your annual tax return.

The first quarterly deadline was 7 August 2026, with subsequent deadlines falling on 7 November, 7 February and 7 May.

What happens if your quarterly update is late?

HMRC has introduced a points-based penalty system for late MTD submissions. However, there is some flexibility during this first year.

There are no penalty points for late quarterly updates during the 2026 to 2027 tax year. You must keep digital records and submit the required quarterly updates before you can submit your tax return. Penalties can still apply to late tax returns and late tax payments.

From 6 April 2027, the points-based system will apply to missed quarterly deadlines. A taxpayer will receive one penalty point for each missed quarterly deadline. Once four points have been accumulated, HMRC will charge a £200 penalty. Further missed submission deadlines can result in additional £200 penalties.

This makes getting into good habits now particularly important.

More businesses will join MTD from April 2027

The next major change takes place from April 2027, when MTD for Income Tax will apply to sole traders and landlords with qualifying income of more than £30,000. The threshold will then reduce to more than £20,000 from April 2028.

If your 2025 to 2026 income suggests you'll likely fall within the new £30,000 threshold, now is a good time to start preparing.

This includes keeping your financial records up to date, choosing HMRC-compatible accounting software, and getting comfortable keeping your records digitally.

How we can help

Moving to Making Tax Digital doesn't have to be complicated, but preparing early can make the transition much easier.

We can help you understand whether MTD applies to you, organise your accounting records, and choose appropriate accounting software. If you are already within MTD, we can also help you keep on top of your quarterly reporting requirements.

Don’t wait until your first deadline is approaching. Speak to the us now and make sure your business is ready for Making Tax Digital. You can call us on 01623 490 120 or email This email address is being protected from spambots. You need JavaScript enabled to view it.