Making Tax Digital for Income Tax
Why is doing things the new way a good thing?
We get it – using Making Tax Digital (MTD) software to keep records little and often is extra effort up front, spread throughout the year for sole traders and landlords.
The trade-off?
Once you’ve got into the habit of logging income and expenses like this, there are ways MTD for Income Tax could benefit you and your business.
View up-to-date
cash flow
Useful for
business planning
No more scrambling
for lost receipts
Log them as you go,
instead of all at once
See your predicted
tax bill, year round
Goodbye to any
January surprises
Make tax admin
easier
MTD software can tally up
invoices for you
Fix any errors you spot
as you go
So you don’t overpay
or underpay tax
Like any big change, it will take time to get used to doing things differently
We know keeping records the new way could be a lot to take on board. And we understand you might feel comfortable with the way you manage your taxes already.
But bear with us. Because MTD for Income Tax will make things more manageable down the line.
You’ve probably got some questions
Why is the way you do tax changing?
It’s part of the UK government’s goal to modernise the tax system and close the tax gap – the difference between what tax should be paid and what people actually pay.
What if I earn money from both working for myself and property?
Keep separate records for both. You’ll send separate quarterly updates for each type of income.
Then they’ll all pull through into one end-of-year tax return.
Making Tax Digital for Income Tax has been delayed before – will it actually happen?
The UK government has restated that it is committed to delivering Making Tax Digital for Income Tax from April 2026.
Do limited companies have to use this?
No. But you may already use Making Tax Digital for VAT if you’re VAT registered.
What if I’m a partner in a business?
You do not need to use Making Tax Digital for Income Tax for the partnership. You’ll continue to do a Self Assessment tax return.
Do you also have income from self-employment or property that is outside the partnership? You’ll need to use the new service if your turnover from these sources meets the qualifying thresholds.
What if I miss a deadline?
We’re introducing points-based penalties to make things fairer. If you miss a submission deadline, you’ll get a penalty point. Get too many points and you’ll pay a fine.
The number of points depends on what updates you are expected to send to HMRC each year.
I already use software to submit my Self Assessment tax return – can I keep using this?
Maybe. You’ll need to check with your software provider to make sure it will work with Making Tax Digital.
If not, you’ll need to start using new software that does.
You can check if the software you use is included on our list of compatible software on GOV.UK
Can I get an exemption?
You can apply for an exemption if:
- You can’t use software to keep digital records or submit them – this may be due to your age, disability, location or another reason
- you are a practising member of a religious society (or order) whose beliefs are incompatible with using electronic communications or keeping electronic records.
You won’t need to use the new service until April 2027 if you have to send an SA109 form – for example, to tell HMRC you are a non-UK resident.
Find out if and when you need to use Making Tax Digital for Income Tax on GOV.UK
Do the quarterly updates really matter – can’t I just sort everything out through the end-of-year tax return?
HMRC expects everyone to take reasonable care with their digital records. Your quarterly updates should therefore match the income and expenses for each three-month period. You could get a penalty if you don’t keep adequate digital records.
What happens if I miss out some income and expenses from a quarterly update – do I need to resend that update?
No, don’t worry. You can add in the missed information on your next quarterly update.
Where can I build my digital skills to get ready?
The National Careers Service has a guide on free training that’s out there, including courses that cover digital record keeping.
There are lots of ways to improve your digital skills. Not all learning has to take place in a classroom – you can learn in your own pace and in your spare time.
What if software isn’t working the way it should?
Check with your software provider as soon as possible, as each software works slightly differently.
What about the Construction Industry Scheme (CIS)?
If you’re a contractor registered with the scheme, you’ll still need to send your CIS returns monthly to get deductions. You can use software that handles both CIS and Making Tax Digital. Ask software providers about this.
Are you a subcontractor? When the new system kicks in, you’ll just include any CIS deductions in your quarterly updates. Some software will even do CIS deductions automatically for you – ask software providers about this.
Find out more about the Construction Industry Scheme on GOV.UK
I think my total turnover will be between £30,000 and £50,000 – is there a timeline to help me get ready?
| 31 January 2027 | Deadline to submit a Self Assessment tax return for 2025 to 2026 |
| 6 April 2027 | When you must start keeping records using Making Tax Digital software |
| 7 August 2027 | Deadline to send HMRC your first quarterly update |
| 7 November 2027 | Deadline to send your second quarterly update |
| 31 January 2028 | Deadline to submit your Self Assessment tax return for 2026 to 2027 |
| 7 February 2028 | Deadline to send your third quarterly update |
| 7 May 2028 | Deadline to send your fourth quarterly update |
| 7 August 2028 | Deadline to send your first quarterly update of the 2028 to 2029 tax year |
| 7 November 2028 | Deadline to send your second quarterly update |
| 31 January 2029 | Deadline to submit your end-of-year tax return straight from Making Tax Digital software for 2027 to 2028 |
| 7 February 2029 | Deadline to send your third quarterly update |
| 7 May 2029 | Deadline to send your fourth quarterly update |