In one paragraph: sole traders and landlords whose self-employment and property income before expenses was over £50,000 in 2024/25 have had to use MTD for Income Tax since 6 April 2026. The threshold drops to over £30,000 (based on 2025/26) from April 2027, and over £20,000 (based on 2026/27) from April 2028. They keep digital records in compatible software, send a short quarterly summary by the 7th of August, November, February and May, and submit the tax return through the software by 31 January. When they pay tax doesn't change. And there are no penalty points for late quarterly updates in 2026/27.
Jump to: Who's in · Free checker · Deadlines · Penalties · Software and spreadsheets · What clients get wrong · Client email · FAQ
Who has to use it, and when
| Qualifying income over | In the tax year | Must use MTD from |
|---|---|---|
| £50,000 | 2024 to 2025 | 6 April 2026 (now) |
| £30,000 | 2025 to 2026 | 6 April 2027 |
| £20,000 | 2026 to 2027 | 6 April 2028 |
Qualifying income is the total of self-employment and property income before expenses: turnover and gross rent, not profit. HMRC's own example: £25,000 of rent plus £27,000 of self-employment income is £52,000, so that person is in from April 2026, even if their profit is far lower.
- Doesn't count: employment (PAYE) income, a partner's share of partnership profit, dividends (including from the client's own company), the State Pension and private pensions.
- Jointly owned property: only the client's share counts. A £50,000 rent roll split equally between two siblings is £25,000 each.
- New sole traders: HMRC annualises a short first period. Six months' trading is doubled to test the threshold. Landlords have to annualise their own figures.
- A ceased source still counts if the client has another continuing self-employment or property income. If all of it stopped before 6 April 2026, they don't need MTD, but should tell HMRC if their 2025/26 return isn't in yet, or HMRC may sign them up anyway.
- Getting out: once in, a client can choose to leave if qualifying income is below the threshold for 3 tax years in a row. At £20,000 or less, they're automatically exempt.
- No letter is no excuse. HMRC writes after checking the earlier year's return, but says it's still the taxpayer's responsibility to check and sign up.
- Exemptions include being digitally excluded (you apply), having no National Insurance number before the tax year starts, and some automatic ones for 2026/27 only (for example, averaging relief, qualifying care relief, or the SA109 residence pages on the 2024/25 return). Partnerships aren't in yet. See HMRC's exemptions page.
Free checker: start date and next deadline
Enter the client's self-employment plus property income before expenses for each year you know. Leave a year blank if you don't know it yet. Nothing you type leaves your browser.
This applies the three thresholds above. It doesn't test exemptions, annualise a short year or handle partnerships. Confirm with HMRC's own checker.
The quarterly update deadlines
A quarterly update is a summary: totals for each income and expense category, worked out by the software. HMRC doesn't receive individual receipts or invoices. It is not a tax return.
| Update | Standard periods (default) | Calendar periods | Deadline |
|---|---|---|---|
| 1 | 6 April to 5 July | 1 April to 30 June | 7 August |
| 2 | 6 April to 5 October | 1 April to 30 September | 7 November |
| 3 | 6 April to 5 January | 1 April to 31 December | 7 February |
| 4 | 6 April to 5 April | 1 April to 31 March | 7 May (the following tax year) |
- Each update covers the tax year so far, not just the latest three months. Fix a mistake in the records and the correction goes in with the next update. There's no separate amendment.
- Calendar periods suit a business whose accounting period runs 1 April to 31 March. They have to be chosen in the software before the first update, and can't be changed for the rest of that tax year.
- Nothing happened? A nil update still has to be sent.
- When: any time after the period ends, up to and including the 7th. Or up to 10 days before the period ends if no more transactions are expected.
- Signed up late? Catch the records up from 6 April. They go in with the first update.
- After update 4: any corrections (or a late Rent-a-Room decision) mean resending update 4, then making the year-end adjustments, then submitting the tax return through the software by 31 January.
For the practice: work the records deadline back from the 7th. If you need two weeks to review, clients' records for the period to 5 October are due by about 24 October. The free records-chaser skill builds that request and the chasing sequence for you.
Penalties: what's live now and what isn't
| 2026 to 2027 (first year) | From 2027 to 2028 | |
|---|---|---|
| Late quarterly update | No penalty points | 1 point per missed deadline. 4 points = £200 penalty, and £200 for each further miss |
| Late tax return | 1 point (the 4-point threshold applies) | 1 point |
| Late payment | For MTD users, a new regime from their first MTD year: no penalty if paid (or a payment plan set up) within 30 days in the first year; after that, 3% at day 15, another 3% at day 30, then 10% a year | 15 days' grace (30 days in a client's first MTD year); 4% at day 15, 4% at day 30, then 10% a year |
- The 2025/26 return (due 31 January 2027) is filed the usual way, under the current penalty rules, even for clients who started MTD in April 2026.
- Late payment penalties don't apply to payments on account. Late payment interest works as before.
- Points below the threshold expire 24 months after the missed deadline. At the threshold, they're cleared only after 12 months of on-time submissions with nothing outstanding.
- A payment plan agreed and kept pauses late payment penalties from the date the client contacted HMRC.
Source: Penalties for Making Tax Digital for Income Tax (HMRC, updated 30 March 2026). Volunteers have different rules: there are no points for late quarterly updates, and a 2-point threshold for returns.
Software, spreadsheets and "free" products
There are two kinds of compatible software, and a client can mix them as long as each submission goes through one product:
- Record-keeping software that creates the records (bank feed, receipt scanning or manual entry), sends the updates and submits the return.
- Bridging software that connects to records kept elsewhere, usually a spreadsheet, and makes the submissions. Some bridging products only send updates, so check that it can also submit the tax return, or pair it with one that can.
Spreadsheets are allowed, but the records must be digitally linked. Linked cells, CSV or XML import and export, emailing a spreadsheet for import, an API or an automated transfer all count. Retyping figures, or moving records by cut and paste or copy and paste, doesn't. Original records such as bank statements and invoices still need to be kept.
Less detail if turnover is under £90,000: a sole trader below the VAT threshold only has to record whether each transaction is income or an expense. Residential landlords also have to flag restricted finance costs. Once turnover reaches £90,000, the whole year's records need full categories.
"Free" software: HMRC says free products exist for simple affairs but may limit things like the number of transactions. Check the limits against the client's volume before they commit. Find options with HMRC's software finder. HMRC doesn't recommend products, and neither do we.
What clients get wrong (and the one-line fix)
| The client thinks | Tell them |
|---|---|
| "I have to do four tax returns a year now." | Four short summaries, sent by the software, plus one tax return by 31 January as before. |
| "I'll be paying tax every quarter." | No. Tax is still due 31 January and 31 July. After each update they can see an estimate of the bill, which helps them put money aside. |
| "My profit is only £30k, so I'm not in." | The test is income before expenses, self-employment and rent together. |
| "I didn't get a letter, so it doesn't apply." | HMRC says it's their responsibility to check and sign up anyway. |
| "Each update has to be perfect." | Each one covers the year so far, so fixes go in the next one. HMRC says no accounting or tax adjustments are needed before an update. |
| "I missed 7 August, so I'll get fined." | Not for 2026/27 quarterly updates. Send it now: all four are needed before the return can be filed through the software. |
| "My wages and dividends go in the updates." | Only self-employment and property income and expenses do. Other income goes on the tax return (HMRC pre-fills PAYE, pensions and some benefits). |
An email to send clients who are in from April 2026
Adjust the bracketed parts to your process. Keep the figures to the client's own.
Subject: Your next Making Tax Digital update is due 7 November Hi [first name], A quick reminder about Making Tax Digital (MTD) for Income Tax, which applies to you from this tax year because your [self-employment and rental] income before expenses was over £50,000 in 2024/25. What's due: your second quarterly update, covering 6 April to 5 October 2026, by 7 November. It's a summary of your income and expenses, not a tax return, and it doesn't change when you pay tax. That's still 31 January and 31 July. What we need from you by [date]: 1. [Bank statements / app receipts] for [account] up to 5 October 2. [Any cash sales or expenses not in the bank] 3. [Anything else for this client] Good to know: - Each update covers the year so far, so if anything was missed in the first update, we'll correct it in this one. - HMRC isn't giving penalty points for late updates this first year, but we'd like to keep you on track. All four updates are needed before your 2026/27 return can be filed. - Your 2025/26 tax return is still due by 31 January 2027, filed the usual way. After we send the update, you'll be able to see an estimate of your tax bill so far in [software] and your HMRC online account. Thanks, [name]
For a client who's in from April 2027 (over £30,000 in 2025/26), the useful message now is: pick software this winter, choose standard or calendar periods before the first update, and start keeping records in it from 6 April 2027. The first update is due 7 August 2027, and penalty points apply from then.
Let ChatGPT, Gemini or Claude write these for each client. Our free Bookkeeper Skills include client-explainer, which writes plain-English MTD, payments-on-account and "why is my bill so big" explanations using the client's own numbers, and records-chaser, which works the records date back from the 7th and writes the chasers. Set-up takes about 3 minutes, no coding.
FAQ
Do landlords with only rental income need MTD?
Yes, if their gross rent (their share, for joint lets) is over the threshold. Property income alone can bring someone in. For jointly let properties, the quarterly updates can contain income only, with the expenses added by resending update 4 after the year ends.
My client has two businesses. One update or two?
One set of digital records and one quarterly update for each self-employment and each property business. HMRC's example: an electrician who's also a driving instructor sends separate updates for each. Late-update penalty points are one per deadline, not one per business.
Can a client claim a refund in the MTD tax return?
HMRC's guidance says a refund can't be claimed in the tax return submitted through MTD software. It points to a separate process in its help and support section.
Are partnerships included?
Not yet. HMRC says it will set out a timeline later. A partner's share of partnership profit doesn't count towards their qualifying income, but their own sole-trader or rental income does.
Does this replace Self Assessment?
No. Clients stay in Self Assessment. The tax return is submitted through the software, by 31 January as before, and other income (savings, dividends, partnership shares) is added there.
Sources (HMRC on gov.uk, read 25 October 2026): Find out if and when you need to use MTD for Income Tax; Work out your qualifying income; Send quarterly updates; Create digital records; Submit your tax return; Choose the right software; Penalties; Exemptions. This page is general information written by an AI agent and checked against those sources. It is not tax advice, and the rules can change. Check gov.uk or a qualified adviser before acting. If you spot an error, please open an issue.