Making Tax Digital for Income Tax

Making Tax Digital for Income Tax asks some self employed traders to keep digital records and send four updates a year instead of one Self Assessment return alone. This page was read on gov.uk on 24 October 2026 and the links are at the foot.

Who it applies to

You need to use Making Tax Digital for Income Tax if all of these apply.

• You are a sole trader registered for Self Assessment or a landlord
• You get income from self employment or property or both
• Your qualifying income is over the line for that tax year

Qualifying income is total income before expenses from self employment and property. HMRC works this out from the Self Assessment return you submitted in the previous year.

The line moves in steps.

• Over £50,000 in 2024/25 means you should have started from 6 April 2026 for 2026/27
• Over £30,000 in 2025/26 means you need to use it from 6 April 2027
• Over £20,000 in 2026/27 means you need to use it from 6 April 2028

Partnerships will need to use it in the future. HMRC will set that date later.

To sign up you must be registered for Self Assessment and have submitted a tax return in the last two years. HMRC has said from September 2026 it will start to sign up those who need to use it for 2026/27 and have not signed themselves up. If HMRC signs you up it uses the information it already holds. If your circumstances have changed you must update that information.

If you are under £20,000 on qualifying income you do not need to use it yet. You still send a Self Assessment return as before.

The four dates

The four standard update periods and the date each one must be sent by are fixed by HMRC. Each update covers from 6 April to the end of the period. So the numbers are cumulative through the year.

• 6 April to 5 July 2026. Send by 7 August 2026
• 6 April to 5 October 2026. Send by 7 November 2026
• 6 April to 5 January 2027. Send by 7 February 2027
• 6 April to 5 April 2027. Send by 7 May 2027

After the fourth update you also complete the tax return for the year. Software that works with Making Tax Digital sends the updates and the return.

If you need to use it from April 2026 HMRC has said it will not apply penalty points for late quarterly updates in the first year 2026/27. Penalties still apply for a late tax return or for paying late.

What counts as a miss and what it costs

HMRC uses a points model for regular submissions. You get a point each time you miss a deadline. HMRC tells you about each point. At a set number of points a £200 penalty is charged and you are told. Every later miss after the threshold also costs £200. Points last two years then expire unless you are at the threshold. At the threshold points only reset after a period of compliance and after you have sent everything due in the last 24 months.

For quarterly submissions including Making Tax Digital for Income Tax the threshold is four points. The period of compliance to reset is twelve months. The time limit for HMRC to levy a point for a quarterly miss is eleven weeks. The time limit to assess a penalty is two years.

These rules are in the penalties for late submission publication on gov.uk.

The four things trades get wrong

One. Thinking turnover and profit are the same line

The line is qualifying income before expenses. A trader on £55,000 taken before costs is over the £50,000 line even if profit after materials and fuel is far lower. Check the gross figure on the return HMRC used.

Two. Thinking Self Assessment has ended

It has not. You still send a Self Assessment return for the year before you start. Once you are in Making Tax Digital you still send a tax return through software after the four updates. The updates do not replace the return.

Three. Thinking each quarter stands alone

It does not. Each update covers from 6 April to the end of that period. So the second holds the first and the fourth holds the whole year. If you fix an early record the next update carries the fix. Do not rework the past quarter as a separate book.

Four. Thinking VAT and CIS sit inside the update without care

If you are VAT registered the figure to count against the line is money received net of VAT. CIS deductions are advance tax not sales. Keep the three apart in your records so the update does not overstate takings. The app shows VAT where you are VAT registered and keeps CIS as a separate record for that reason.

What to do this week if you are behind

Do these in order. They take less than an hour.

1. Check if you are in it. Use the gov.uk tool to find out if you need to use Making Tax Digital for Income Tax. It asks about the tax years 2024/25 and 2025/26 and the income you declared or will declare. If you are over £50,000 in 2024/25 you should be signed up for 2026/27. If you are under that but over £30,000 in 2025/26 you start from April 2027.

1. Check your Self Assessment login. You need the same user ID and password you used to register for Self Assessment. If you have not submitted a return in the last two years you must do that first. If you use an agent they can sign you up.

1. Pick software that works with Making Tax Digital. You need software that can create digital records and send the four updates and the return. Read the step by step guidance on gov.uk. YellowTradie keeps records in HMRC's own quarters and shows money received since 6 April. It does not yet file an update with HMRC. That is stated on the Making Tax Digital feature page.

1. Sign up if you are due for 2026/27. If HMRC has not already signed you up you can sign up now through the online service. From September 2026 HMRC will sign up those who are due and have not. It is better to sign up yourself so your income sources and trade details are right from the start. You must confirm your business name and address and trade and start date if within the last two tax years and which tax year you start.

1. Keep records from 6 April in one place. Record self employment and property income and expenses digitally. The app's expense categories are the thirteen HMRC uses for the update. Use them so the split is ready when you need it.

Sources

Every date and line above was read on gov.uk on 24 October 2026.

• Find out if and when you need to use Making Tax Digital for Income Tax on gov.uk. https://www.gov.uk/guidance/find-out-if-and-when-you-need-to-use-making-tax-digital-for-income-tax. Who it applies to. Qualifying income before expenses. Thresholds £50,000 from April 2026 based on 2024/25 and £30,000 from April 2027 and £20,000 from April 2028. Partnerships later. Exemptions exist.
• Sign up for Making Tax Digital for Income Tax on gov.uk. https://www.gov.uk/guidance/sign-up-for-making-tax-digital-for-income-tax. You must be registered for Self Assessment and have submitted a return in last two years. HMRC will start signing up from September 2026. First year points easement for quarterly updates in 2026/27.
• Penalties for late submission on gov.uk. https://www.gov.uk/government/publications/penalties-for-late-submission/penalties-for-late-submission. Points model. £200 at threshold. Four points for quarterly. Twelve months compliance to reset. Eleven weeks to levy and two years to assess.