Making Tax Digital FAQs
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.
How do HMRC work out my start date?
We’ll only look at your total turnover from self-employment and property, put together, on your latest tax return.
Your turnover is the amount of money you bring in before you take off any expenses or pay tax. This is sometimes called ‘gross income’.
Got other types of income? We won’t include those. And they do not count towards the amounts shown above.
What if my turnover reaches one of the threshold amounts?
HMRC will contact you to confirm that you need to get ready for Making Tax Digital.
I’ve only just started working for myself or renting out property – do I need to do this?
Not right away. First, you’ll do one Self Assessment tax return. Then HMRC will check your turnover. We’ll let you know when you need to sign up.
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 tax return.
Do limited companies have to use this?
No. But you may already use Making Tax Digital for VAT if you’re VAT registered.
Do partnerships have to use this?
Not yet. Partnerships will need to use Making Tax Digital for Income Tax in the future. But for now, you’ll carry on doing a Self Assessment tax return. We’ll set out the timeline for when you need to start using the new service at a later date.
What if I’m a partner in a business?
If your total turnover from self-employment and property income goes above the qualifying thresholds, then you’ll need to use the new service. You’ll report your partner income through your compatible software before you submit your tax return.
Find out more on GOV.UK about how to use Making Tax Digital for Income Tax to submit your tax return.
What if I miss a submission 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.
No penalties will apply for the late submission of quarterly updates during the 2026/27 tax year. However, all quarterly updates need to be sent before the tax return can be submitted.
Find out more on GOV.UK about penalties for Making Tax Digital for Income Tax.
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?
Exemptions for Making Tax Digital for Income Tax can either be:
- automatic exemptions – these are given by HMRC based on the information we hold
- exemptions you need to apply for – you should provide additional information with your application to tell us why you are exempt
These exemptions can either be:
- permanent – unless your circumstances change
- temporary – lasting until April 2027 at the earliest
For example, you can apply for an exemption if you think you’re digitally excluded. This means it is not reasonable for you to use compatible software to keep digital records, send quarterly updates or submit your tax return.
There are different reasons why this might apply to your circumstances but this could be because:
- your age, disability, health condition or location stops you from using a computer, tablet or smartphone
- you’re a practising member of a religious society or order, whose beliefs are incompatible with using digital communications or keeping digital records
You can find out if you can get an exemption from Making Tax Digital for Income Tax – GOV.UK.
Do the quarterly updates really matter – can’t I just sort everything out through my 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 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?
If you find an error or missing information in your digital records, you should correct it, it will then be included when you send 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