Making Tax Digital
Making Tax Digital for Income Tax: when it starts for you
Type your turnover and rents for each year and the checker gives the April you join, if you join at all.
Making Tax Digital for Income Tax (MTD) reaches sole traders and landlords in three waves, decided by qualifying income: turnover from self-employment plus gross rents, before any expense. Over £50,000 in 2024/25 and you started on 6 April 2026; over £30,000 in 2025/26 and you start on 6 April 2027; over £20,000 in 2026/27 and the date is 6 April 2028. A mobile hairdresser taking £34,000 a year therefore joins on 6 April 2027, whatever her profit. Wages, dividends, pensions and a partner’s share of partnership profit are left out of the test. Once in, you keep digital records in compatible software, send a cumulative update every quarter and file the year’s return through the same software by 31 January. The tax itself, the payment dates and payments on account do not change. Enter your figures for each year and the checker shows the first April that applies.
Making Tax Digital for Income Tax
From 6 April 2027
Qualifying income of £38,000 in 2025/26 is over the £30,000 threshold.
| Update 1 (6 April to 5 July) | 7 August 2027 |
| Update 2 (6 April to 5 October) | 7 November 2027 |
| Update 3 (6 April to 5 January) | 7 February 2028 |
| Update 4 (6 April to 5 April) | 7 May 2028 |
| Tax return and payment | 31 January 2029 |
Late updates and returns then earn points: 4 points bring a £200 penalty.
HMRC reads these figures from your Self Assessment returns and writes to you, but the duty to sign up is yours even without a letter. Exemptions exist (digital exclusion, some carers). Method
Figures checked by Radif Partners · Editorial policy · How we calculate
Who is brought in
MTD for Income Tax is a new way of doing Self Assessment, not a new tax. It applies to individuals who are registered for Self Assessment, have filed a return, and receive income as a sole trader, as a landlord or as both. Partnerships are outside it for now; HMRC has said it will give their timetable later.
The trigger is qualifying income, which HMRC reads from the return you sent the year before the start. Three thresholds apply in turn:
| Return for | Qualifying income | Start date |
|---|---|---|
| 2024/25 | over £50,000 | 6 April 2026 |
| 2025/26 | over £30,000 | 6 April 2027 |
| 2026/27 | over £20,000 | 6 April 2028 |
The word “over” matters: someone at exactly £50,000 in 2024/25 was not caught by the first wave. Turnover is the gross figure, so two businesses with the same profit can land in different waves. Here is how the checker places four typical cases, assuming the same takings every year:
| Example | Turnover plus rents | First MTD year from |
|---|---|---|
| Courier, turnover only | £52,000 | 6 April 2026 |
| Tutor with a rented flat | £32,000 | 6 April 2027 |
| Designer, part-time | £24,000 | 6 April 2028 |
| Weekend market trader | £15,000 | not required |
The details of what counts, from jointly owned lets to a first year of trading that HMRC scales up to twelve months, are on the qualifying income page.
The letter from HMRC
After each Self Assessment return is processed, HMRC compares your turnover and rents with the threshold that follows. If you are over it, a letter arrives saying you must use MTD from the start of the next tax year. Silence is not a pass, though. The guidance puts the responsibility on you to check, sign up and have software ready, whether or not the letter comes. To sign up you need to be registered for Self Assessment and to have sent a return in the last two years. If you believe HMRC has got it wrong, for example because a business has closed, you contact them; when all self-employment and property income has stopped, telling HMRC early prevents an automatic sign-up.
Getting ready before the start date
HMRC suggests an order. Confirm that you are in and not exempt, pick software that covers every business you run, then sign up and authorise that product (or let your agent do it). Records begin on the first day of the MTD year: 6 April for most people, 1 April if your accounts run to 31 March. Take a self-employed electrician due to start on 6 April 2027: the return for 2025/26, and for 2026/27 after it, is still filed the old way, while every invoice and receipt from that April onwards goes into the new software.
What changes once you join
Three habits are new. First, every sale and every cost of the business is recorded digitally, with its date, amount and Self Assessment category, in software that can talk to HMRC (spreadsheets linked through bridging software count). The software guide explains what the product must do. Second, four times a year the software adds up those records and sends a cumulative summary from the start of the tax year: the first one, for 6 April to 5 July, is due by 7 August, and the full calendar sits on the quarterly deadlines page. Third, the year-end return is finished and submitted in the same software, with any other income added.
Penalties change too. Late filing becomes a points system and late payment a sliding percentage. For 2026/27, a late quarterly update earns no point at all. The figures are worked through on the MTD penalties page.
You still pay Income Tax and Class 4 on the year’s profit, and the bill is still due by 31 January after the year ends, with payments on account on the usual dates. The quarterly figures are summaries, not tax returns, and they do not create a bill of their own. You do not have to make accounting adjustments before sending one.
Exemptions
Some people are left out automatically, without applying. Qualifying income of £20,000 or less is the obvious case. Having no National Insurance number before the tax year begins is another. Trusts, non-resident companies and personal representatives acting for someone who has died are exempt in that role. Ministers of religion filing the SA102M page, Lloyd’s members and people claiming Married Couple’s or Blind Person’s Allowance are exempt beyond 6 April 2027. A shorter, automatic exemption covered 2026/27 for returns showing averaging relief, qualifying care relief (foster and kinship carers), trust income on SA107 or the residence pages SA109.
Others must apply. The main route is digital exclusion: age, health, disability, a religious belief incompatible with digital records, or a location with no internet access at home, at work or anywhere suitable. HMRC rejects applications whose only reason is a preference for paper, unfamiliarity with accounting software, a small number of records or the time and cost involved. A VAT trader already excused from MTD for VAT on these grounds can ask Self Assessment enquiries to confirm the same for Income Tax.
Leaving again
Joining is not for life. If your qualifying income stays below the relevant threshold for 3 tax years in a row, you can choose to opt out. Closing every self-employment and property source before the year you were due to start also takes you out, provided HMRC knows about it; if you amend an earlier return and the corrected figure falls below the line, you can stop or carry on voluntarily.