Starting April 2026, self-employed individuals and landlords in the UK with earnings over £50,000 must switch to the Making Tax Digital (MTD) system for Income Tax Self Assessment. From April 2026, you'll need to submit your tax info quarterly instead of once a year, and that means getting used to new software and keeping digital records. Here’s what you need to know to stay compliant and avoid penalties.

Who Does Making Tax Digital Affect?

If you're self-employed or a landlord in the UK and your combined turnover from self-employment and property rental exceeds £50,000 for the tax year ending April 5, 2025, then MTD will apply to you starting April 6, 2026. This means you must keep digital records and submit quarterly updates to HMRC using MTD-compatible software instead of filing the traditional annual Self Assessment tax return.

This threshold is based on your total income, not just profits, so you need to add up all turnover from your business and rental income. If your combined income is between £30,000 and £50,000, you have until April 6, 2027, before MTD becomes mandatory. This additional year gives smaller businesses and landlords more time to prepare.

MTD currently applies to VAT-registered businesses with turnover above £85,000, but this expansion to Income Tax Self Assessment is the biggest change yet, covering millions of self-employed people and landlords in the UK.

If you earn less than £30,000, MTD doesn't apply, but you can choose to join early if you want to keep digital records and send updates every quarter.

Timeline for Compliance

April 6, 2026: This is the key date when self-employed individuals and landlords earning over £50,000 must start using MTD for Income Tax Self Assessment. From this day, you must keep digital records and send quarterly updates to HMRC through compatible software.

April 6, 2027: If your income is between £30,000 and £50,000, MTD becomes mandatory on this date. Until then, you can choose to prepare early or continue with the current system.

Keep in mind that you need to register for MTD ahead of these deadlines. HMRC recommends signing up at least 30 days before your first quarterly update is due to avoid delays. You’ll also need to ensure your accounting software is set up and tested well in advance.

HMRC warns thousands of taxpayers have yet to prepare. Failure to comply could lead to penalties, including fines for late submissions and interest on unpaid tax.

Make sure you get ready well before the deadline.

Choosing Compatible Software

To comply with MTD, you must use software that can connect digitally with HMRC to submit your quarterly updates. Common options include FreeAgent, Xero, QuickBooks, and Sage, which are widely used by freelancers, small businesses, and landlords.

You can find the full list of approved software providers on HMRC’s official site: Https://www.gov.uk/guidance/find-software-thats-compatible-with-making-tax-digital-for-income-tax. This page is regularly updated as new software becomes available.

The software must allow you to keep digital records of all your income and expenses and send quarterly updates electronically. It should also handle calculations for your Income Tax, Class 2 and Class 4 National Insurance contributions, and any other relevant liabilities.

Many software options come with mobile apps and bank feeds that help automate data entry, which cuts down mistakes and saves you time. Some even provide tax forecasts so you can plan ahead for payments.

Remember, spreadsheets or manual record-keeping won’t meet MTD requirements unless they're connected to compatible software that can submit your data digitally to HMRC.

Understanding Quarterly Reporting

Under MTD, you no longer submit a single annual Self Assessment tax return. Instead, you send four digital updates during the tax year—each covering a quarter’s worth of income and expenses.

These quarterly updates must be submitted within one month after the end of each quarter. The quarters and deadlines are:

  • Quarter 1: April 6 – July 5, update due by August 5
  • Quarter 2: July 6 – October 5, update due by November 5
  • Quarter 3: October 6 – January 5, update due by February 5
  • Quarter 4: January 6 – April 5, update due by May 5

Each update reports your income, expenses, and profit to HMRC. This allows the tax authority to calculate your estimated tax liability in real time.

Alongside these quarterly updates, you’ll still need to file an annual declaration summarizing your income and confirming your tax due. But the big difference is that you provide HMRC with more frequent data, reducing errors and surprises when it comes to payment time.

Quarterly reporting also helps with cash flow management since you get a clearer picture of your tax liabilities throughout the year.

HMRC says the system is easy to use. Many software providers offer step-by-step guidance for submitting quarterly updates, including reminders and validation checks to avoid mistakes.

How to Sign Up for Making Tax Digital

To start using MTD, you must register with HMRC online. You can do this via your Government Gateway account — the same one used for submitting Self Assessment returns.

Here’s how to sign up:

  1. Log in to your HMRC online account.
  2. Go to the Making Tax Digital for Income Tax page and select "Sign up".
  3. Confirm your identity by providing your Unique Taxpayer Reference (UTR), National Insurance number, and other requested details.
  4. Choose your software provider and link your software to your HMRC account.
  5. Complete the registration process and wait for confirmation from HMRC. This can take a few days.

You must sign up at least 30 days before your first quarterly update is due to avoid penalties for late submissions.

Tips for a Smooth Transition

  • Start early: Don’t wait until April 2026. Get your software set up and familiarize yourself with quarterly reporting now.
  • Keep accurate records: Maintain detailed digital records of all income and expenses. Use bank feeds where possible to automate entries.
  • Plan your cash flow: Quarterly updates mean you’ll need to budget for tax payments more frequently. Set aside funds regularly to avoid surprises.
  • Seek professional help: If you’re unsure about software or reporting requirements, consider consulting an accountant or tax advisor experienced with MTD.
  • Use HMRC resources: Visit HMRC’s MTD guidance for detailed instructions and FAQs.

Common Mistakes to Avoid

  • Not signing up on time: Missing the registration deadline can trigger penalties and complicate your filings.
  • Using incompatible software: Double-check that your software is approved by HMRC for MTD submissions.
  • Failing to keep digital records: Paper records or spreadsheets alone won’t meet MTD rules unless linked to digital submission software.
  • Missing quarterly deadlines: HMRC imposes fines for late or missed updates. Set reminders to stay on schedule.
  • Ignoring updates and declarations: Quarterly updates don’t replace your annual declaration. Don’t skip the year-end summary.

If you’re self-employed or a landlord earning over £50,000, April 6, 2026, is the date to switch to Making Tax Digital. Get your software ready, sign up early, and start submitting quarterly updates to HMRC to stay compliant and avoid penalties.