Last checked: 14 October 2026. General information, not tax advice. MTD HQ is independent and not affiliated with HMRC.
Making Tax Digital (MTD) is HMRC’s programme to move tax records and reporting online. For Income Tax, it means sole traders and landlords over an income threshold keep their records in software, send HMRC a short update every three months, and send their yearly tax return through that software. It started on 6 April 2026 for people with qualifying income over £50,000, and the threshold drops to £30,000 in April 2027 and £20,000 in April 2028.
MTD isn’t a new tax and doesn’t change how much you pay. It changes how you keep records and how often you report.
Want to know if it applies to you? Use our free Making Tax Digital threshold checker.
What changes under Making Tax Digital
| Self Assessment before MTD | With MTD for Income Tax | |
|---|---|---|
| Records | Paper, a notebook, spreadsheets or software | Digital records in MTD-compatible software, or a spreadsheet linked to bridging software |
| Reporting during the year | Nothing | A quarterly update every three months: a summary of income and expenses |
| Tax return | Once a year, online or on paper | Once a year, sent through your software |
| Paying your tax | 31 January and 31 July | No change: 31 January and 31 July |
| How much tax you pay | Worked out on your yearly figures | No change |
A quarterly update isn’t a tax return, and no tax is paid when you send one. Each update covers the tax year so far. Your yearly tax return, due by 31 January after the tax year ends, is still where you confirm your final figures and claim reliefs.
Which taxes does MTD cover?
- VAT: MTD started in April 2019 for businesses with turnover above the VAT threshold, and was extended to all VAT-registered businesses from April 2022.
- Income Tax: for sole traders and landlords, in stages from 6 April 2026. This is what most people now mean by “MTD”, and what this site covers.
- Partnerships: GOV.UK says they will need to join MTD for Income Tax in the future, with no date set yet.
- Corporation Tax: not covered. In July 2025 HMRC said it doesn’t intend to introduce MTD for Corporation Tax. See MTD for limited companies and partnerships.
Who has to use MTD for Income Tax?
You have to use it if you’re registered for Self Assessment, you get income from self-employment or property, and your qualifying income is over the threshold. Qualifying income is your self-employment and property income added together, before expenses. It’s your turnover, not your profit.
| HMRC checks your… | If qualifying income is over | You use MTD from |
|---|---|---|
| 2024/25 tax return | £50,000 | 6 April 2026 |
| 2025/26 tax return | £30,000 | 6 April 2027 |
| 2026/27 tax return | £20,000 | 6 April 2028 |
Wages, pensions, savings interest, dividends and your share of a partnership’s profit don’t count towards the threshold. HMRC estimated that around 780,000 people would need to use MTD from April 2026, and said in October 2026 that around 1,077,000 more sole traders and landlords will join from April 2027.
Read more: MTD for sole traders and the self-employed and MTD for landlords.
What you need to do once you’re in
- Choose MTD-compatible software. HMRC doesn’t provide its own, but some commercial options are free. See our free MTD software comparison. If you prefer spreadsheets, you can use bridging software.
- Sign up for MTD with HMRC, using your Government Gateway details. See how to sign up for MTD.
- Keep digital records of your income and expenses as you go.
- Send four quarterly updates a year, by 7 August, 7 November, 7 February and 7 May. See the MTD deadline finder.
- Send your tax return through your software by 31 January after the tax year ends.
An accountant or tax agent can do all of this for you if you prefer.
Why HMRC introduced Making Tax Digital
HMRC says keeping digital records through the year should reduce mistakes in tax calculations, spread the work more evenly than one rush in January, and give people a clearer picture of what they’re likely to owe. It points to research on MTD for VAT, where most businesses reported at least one benefit, such as fewer record-keeping errors. Not everyone agrees the extra reporting is worth it, but the rules apply either way.
Penalties
Late quarterly updates and late tax returns earn penalty points. At 4 points you get a £200 penalty. For the 2026/27 tax year only, HMRC won’t give points for late quarterly updates, but a late tax return still counts. Paying late is separate and carries its own penalties and interest. See the GOV.UK penalties guide.
Can you get out of MTD?
Some people are exempt automatically, for example if your qualifying income is £20,000 or less or you don’t have a National Insurance number. Others can apply to HMRC, for example if age, disability or where you live means you can’t reasonably use a computer. See our MTD exemptions guide.
Common questions about Making Tax Digital
Is MTD a new tax? No. It’s a new way of reporting the same Income Tax.
Do I pay tax every quarter? No. Quarterly updates are summaries only. You still pay on the usual Self Assessment dates.
Do I still send a tax return? Yes, once a year, but through your MTD software rather than HMRC’s website.
Can I keep using a spreadsheet? Yes, if you link it to HMRC with bridging software and record each transaction.
Do I need an accountant? No, many people do it themselves with simple software. An accountant can help if you’d rather not.
Does MTD apply to my salary? No. Wages from a job don’t count towards the threshold and aren’t part of your quarterly updates.
What does MTD stand for? Making Tax Digital. You’ll also see MTD for ITSA, which means MTD for Income Tax Self Assessment: the same thing.
Sources: GOV.UK, Use Making Tax Digital for Income Tax, Extension of Making Tax Digital for VAT, One year until Making Tax Digital for Income Tax launches and Sole traders and landlords earning more than £30,000 urged to act now. Checked 14 October 2026. This page is general information, not tax advice.