Key points
- MTD for Income Tax applies to sole traders and landlords. It is based on gross income (turnover), not profit.
- Who must join: income over £50,000 from 6 April 2026, over £30,000 from 6 April 2027, and over £20,000 from 6 April 2028.
- You keep digital records in compatible software and send 4 quarterly updates plus a final declaration by 31 January: five submissions a year.
- In 2026/27 HMRC does not give penalty points for late quarterly updates. From 2027/28 the full points system applies.
Who has to join
Add up your gross income from self-employment and from property. Not profit: turnover, before costs. HMRC looks at the tax return for the year two years earlier.
| Your qualifying income | Measured on | You join from |
|---|---|---|
| Over £50,000 | 2024/25 return | 6 April 2026 |
| Over £30,000 | 2025/26 return | 6 April 2027 |
| Over £20,000 | 2026/27 return | 6 April 2028 |
A hairdresser takes £28,000 a year and lets a flat for £12,000. Her qualifying income is £40,000, so she joins from April 2027, even though her profit is far lower.
Partnerships and limited companies are not in MTD for Income Tax. Salary, dividends and pensions do not count towards the threshold. Some people can be exempt, for example if they cannot use digital tools because of age, disability or where they live.
What changes in practice
- Digital recordsEvery sale and every cost recorded in MTD-compatible software, not in a paper book or loose spreadsheets.
- Quarterly updatesTotals of income and costs sent to HMRC four times a year, by 7 August, 7 November, 7 February and 7 May.
- Final declarationYear-end adjustments, other income and reliefs, by 31 January. It replaces the usual tax return.
Quarterly updates are not tax payments. Payment dates stay the same: 31 January and 31 July.
Penalties
Late submissions earn penalty points. At four points, HMRC charges £200, and another £200 for every further late submission. For 2026/27 HMRC does not give points for late quarterly updates, but the final declaration and payments still have penalties. Late payment brings interest and penalties as before.
How to get ready
- Choose software that fits how you work, and connect your bank feed.
- Keep business and personal money in separate accounts.
- Start recording monthly now, not at the year end.
- Decide who will send the quarterly updates: you, or your accountant.
At this income level, many self-employed people find a company makes more sense. Read which structure is right for you.
Do you need to join?
What to prepare
0 of 5 ready
One piece of advice
Do not wait for the first deadline. Move your records into software now and run a quarter or two as practice. The people who struggle with MTD are the ones who start in the week the first update is due.
Test yourself
1. Your turnover is £45,000 and your profit is £18,000. When do you join MTD?
MTD looks at gross income, so £45,000 is over the £30,000 threshold.
2. Does salary from a job count towards the MTD threshold?
Only self-employment and property income count.
3. How many submissions a year does MTD involve?
Four quarterly updates plus the final declaration.
4. Do quarterly updates change when you pay tax?
Quarterly updates are reports, not payments.
Law and sources
- GOV.UK: Making Tax Digital for Income TaxWho must join and when
- GOV.UK: penalties for MTD for Income TaxPoints-based late submission penalties
- Income Tax (Digital Requirements) Regulations 2021The legal requirements for digital records and updates
- Finance Act 2021, Schedule 24Late submission penalty points
This guide explains the rules in general terms as at 5 October 2026. It is not advice for your situation. Rules and rates change.
