Making Tax Digital 2026: What You Need to Know

What Is Making Tax Digital for Income Tax?

Making Tax Digital for Income Tax Self Assessment (MTD ITSA) is HMRC's biggest shake-up to the self-assessment system in decades. Starting from 6 April 2026, sole traders and landlords earning above certain thresholds will be required to keep digital records and submit quarterly updates to HMRC using compatible software.

Instead of filing a single annual tax return, you'll report your income and expenses every three months. The aim is to reduce errors, give taxpayers a clearer picture of their tax position throughout the year, and modernise the UK tax system.

MTD for VAT has been in place since 2019, and HMRC is now extending the same digital requirements to income tax. If you're a sole trader, freelancer, or landlord, this affects you — and preparation time is running out.

Who Is Affected?

MTD for Income Tax is being rolled out in phases based on income thresholds:

• From April 2026: Self-employed individuals and landlords with gross income over £50,000 per year
• From April 2027: Those with gross income over £30,000 per year
• Future phases: HMRC has indicated that the threshold may eventually drop further, potentially to £20,000 or lower

Note that this is gross income (total turnover), not profit. So if your business turns over £50,000 but your expenses bring your profit down to £25,000, you are still within scope for April 2026.

If you have both self-employment income and rental income, these are combined to determine whether you meet the threshold. Partnerships are currently excluded from the first phase but are expected to be brought in later.

Key Deadlines and Dates

Here are the critical dates you need to know:

• 6 April 2026: MTD ITSA goes live for those above £50,000
• Quarterly updates: Due by the 7th of the month following the end of each quarter (7 August, 7 November, 7 February, 7 May)
• End of Period Statement (EOPS): Due by 31 January following the end of the tax year
• Final Declaration: Replaces the annual self-assessment return, also due by 31 January

Missing these deadlines will result in penalties under HMRC's new points-based penalty system. Each missed submission adds a penalty point, and once you reach the threshold, you'll face a £200 fine — with further penalties for continued non-compliance. Read more in our guide to MTD penalties.

What Software Do You Need?

Under MTD, you must use HMRC-recognised software to keep your digital records and submit quarterly updates. Spreadsheets alone won't be sufficient unless they're connected to compatible bridging software.

Your software needs to:

• Record income and expenses digitally
• Submit quarterly updates directly to HMRC
• Submit end-of-period statements and final declarations
• Store digital records for the required retention period

TaxBridge is designed specifically for sole traders and landlords who want MTD compliance without accounting jargon. It connects directly to HMRC, handles quarterly submissions, and gives you a real-time view of your estimated tax. See our comparison of the best MTD software for sole traders.

How to Prepare Before April 2026

Don't wait until the last minute. Here's what you should be doing now:

1. Check if you're affected: Review your gross income for the current tax year. If it's over £50,000, you're in the first wave.
2. Choose your software: Sign up for HMRC-recognised software and start familiarising yourself with it before the mandate kicks in.
3. Digitise your records: If you're still using paper receipts or unstructured spreadsheets, start moving to digital record-keeping now.
4. Understand the quarterly cycle: Get used to reviewing your income and expenses every three months rather than scrambling once a year.
5. Talk to your accountant: If you use one, discuss how MTD will change your working relationship. You may find you don't need an accountant for MTD if your affairs are straightforward.

Frequently Asked Questions