10 min read
Since 6 April 2026, Making Tax Digital for Income Tax has become part of the system. If you’re self-employed or a landlord and your income goes beyond £50,000, you’re now included.
For years it was something to prepare for but now it’s something to work with. The key is understanding how it affects your routine.
This change isn’t about higher bills — it’s about more regular financial reporting.
What is Making Tax Digital, really?
At its core, Making Tax Digital is HMRC’s push to move the tax system fully online.
For a long time, the pattern was familiar — track things your own way, keep receipts somewhere safe, and then deal with everything as the Self Assessment deadline approaches.
Under MTD, that once-a-year mindset doesn’t work anymore.
If you fall within the scope, you now need to:
- Keep digital records of income and expenses
- Use software that connects directly to HMRC
- Send updates every three months
- Submit a final declaration at the end of the tax year
The goal is to reduce errors and keep your records current. How easy it feels really depends on how organised you already are.
- If you were using accounting software, the change may be minor.
- If you relied on paper records, it’s likely to feel more significant.
Who is affected right now?
From April 2026, the rules apply if you earned over £50,000 from self-employment or property in the last financial year (2024-25).
That includes:
- Sole traders
- Self-employed individuals
- Landlords
If your income was £50,000 or less, you’re not included yet. But don’t think it won’t affect you in the future; the threshold reduces in stages:
- From April 2027, it drops to £30,000
- From April 2028, it drops again to £20,000
So even if you’re outside the rules this year, there’s a strong chance you won’t be forever.
Limited companies are not part of this phase. This applies to individuals reporting Income Tax through Self Assessment.
What has actually changed?
The tax system itself hasn’t changed as tax rates are the same. What’s changed is how often you report your figures and how you maintain your records.
That difference matters more than it sounds.
The end of the “once a year” approach
Previously, many people gathered everything once a year. January became the month of sorting receipts, checking bank statements, and hoping nothing had been missed.
Under MTD, that approach no longer complies.
Instead of one annual submission, you now send four quarterly updates during the tax year. These cover roughly:
- April to July
- July to October
- October to January
- January to April
After those four updates, you still submit a final declaration to confirm your overall income and tax position.
The table below shows the dates and tax years of the submissions you must make:
Date | Action |
6 April 2026 | Start keeping records using appropriate MTD software |
7 August 2026 | Deadline to submit the first quarterly submission for 2026-27 tax year |
7 November 2026 | Deadline to submit the second quarterly submission (2026-27) |
31 January 2027 | Self Assessment tax return for 2025-26 tax year as normal |
7 February 2027 | Deadline to submit the third quarterly submission (2026-27) |
7 May 2027 | Deadline to submit the fourth quarterly submission (2026-27) |
7 August 2027 | Deadline to submit the first quarterly submission for 2027-28 tax year |
7 November 2027 | Deadline to submit the second quarterly submission (2027-28) |
31 January 2028 | Deadline to submit a tax return directly from the MTD for IT software for the 2026-27 tax year |
7 February 2028 | Deadline to submit the third quarterly submission (2027-28) |
7 May 2028 | Deadline to submit the fourth quarterly submission (2027-28) |
So, instead of one deadline, you now have five touchpoints each year.
The quarterly updates are summaries, not tax payments. But they still need to be accurate and submitted on time.
Digital records are no longer optional
Another major change is the requirement for digital record keeping.
Paper notebooks alone won’t meet the rules. Standalone spreadsheets won’t either unless you use approved bridging software.
You need accounting software that links directly to HMRC and there is now a wide range available, some of which are free.
For many businesses, this is actually where the biggest adjustment happens. It’s not the quarterly updates that feel different — it’s the move to proper digital systems.
Most modern accounting platforms already support MTD. Many also allow you to:
- Scan and store receipts using your phone
- Track mileage automatically
- Create and send invoices
- See your profit in real time
Used properly, these tools can improve visibility over your business finances.
But they do require consistency.
How is this affecting businesses in practice?
On paper, MTD sounds administrative.
In reality, it changes behaviour.
1. You have to stay on top of things
If you’ve ever said, “I’ll sort the accounts later,” that later now comes around much sooner.
Quarterly reporting means you can’t ignore bookkeeping for months at a time. Transactions need to be recorded regularly. Receipts need to be stored properly. Bank accounts need to be reconciled.
Businesses that update their records monthly are finding the transition much smoother than those trying to catch up at the end of each quarter.
Little and often really does make a difference here.
2. You gain better financial awareness
There is a positive side.
Because you’re reviewing your numbers more frequently, you naturally develop a clearer understanding of your business performance.
You’re more aware of:
- How much income is coming in
- Where your money is going
- Whether profits are rising or falling
- How much tax you’re likely to owe
For some business owners, this has been an unexpected benefit. Instead of one annual surprise, they now have ongoing clarity.
Better visibility often leads to better decisions.
3. There is a cost to software
Most MTD-compatible software operates on a monthly subscription.
That’s an added business cost.
However, when used properly, good software reduces manual admin time and lowers the risk of mistakes. It can also replace spreadsheets, paper filing systems and manual calculations.
The important thing is not to overcomplicate it. Choose something that suits your business size and comfort level.
The best system is the one you’ll actually use consistently.
4. Missing deadlines carries consequences
HMRC now operates a points-based penalty system.
Each late submission earns points. If points continue to add up, financial penalties may follow.
The focus is on steady compliance rather than harshly penalising single mistakes. But repeated lateness will eventually have consequences.
This is why building a routine matters so much.
What should you be doing now?
If you are self employed or a landlord and earned over £50,000 last year, you now fall under MTD. If you’re close to that amount, start preparing now.
You can start with these simple actions:
- Check your latest tax return to see your income.
- Make sure your software works with HMRC’s MTD rules.
- If you don’t have software, now is the time to get that sorted.
- Set aside time each month to record income and expenses.
- Put money aside regularly for tax instead of waiting until January.
- If you feel unsure, speak to your accountant sooner rather than later.
Getting the system right early reduces stress later.
Conclusion
Making Tax Digital marks a clear change in how tax reporting works. For some businesses, it means adjusting routines. For others already using digital systems, it’s simply building on what they were doing.
The key difference is consistency. Regular record-keeping replaces the old once-a-year approach. MTD doesn’t increase your tax bill — it changes how you manage it.
If you need help adapting to the new system, professional advice can make the transition smoother and keep your business compliant.
