Making Tax Digital for Income Tax (MTD for Income Tax) is the biggest change to Self Assessment in decades. Since 6 April 2026, many sole traders and landlords must keep digital records and send HMRC quarterly updates through compatible software, instead of filing one tax return a year. If you are self-employed or rent out property in London, here is what the rules mean for you and how to prepare.
Who has to use Making Tax Digital for Income Tax?
MTD for Income Tax applies to individuals registered for Self Assessment who receive income from self-employment, property, or both. Whether and when you join depends on your qualifying income: your total gross self-employment and property income for a tax year, before expenses are deducted. Employment income, pensions, dividends and savings interest do not count towards it.
| Qualifying income | Tax year HMRC looks at | You must use MTD from |
|---|---|---|
| Over £50,000 | 2024/25 | 6 April 2026 |
| Over £30,000 | 2025/26 | 6 April 2027 |
| Over £20,000 | 2026/27 | 6 April 2028 |
For example, a freelance designer with £34,000 of turnover and a small rental flat bringing in £9,000 a year has qualifying income of £43,000, so they will need to use MTD from April 2027, even if their profit after expenses is much lower. Partnerships will join later, on a date still to be announced, and some people are exempt, for example if they are digitally excluded.
What changes under MTD for Income Tax?
- Digital records. You must record your business and property income and expenses digitally, in software that works with MTD or in spreadsheets linked to bridging software.
- Quarterly updates. Every three months you send HMRC a summary of your income and expenses. These updates are not tax returns and you do not pay tax with them, but they must be on time.
- Final declaration. After the tax year ends you confirm your figures, add any other income and claim reliefs. This replaces the traditional Self Assessment tax return and is still due by 31 January.
Key MTD deadlines for 2026/27
| Quarter | Period covered | Update due by |
|---|---|---|
| Quarter 1 | 6 April – 5 July 2026 | 7 August 2026 |
| Quarter 2 | 6 July – 5 October 2026 | 7 November 2026 |
| Quarter 3 | 6 October 2026 – 5 January 2027 | 7 February 2027 |
| Quarter 4 | 6 January – 5 April 2027 | 7 May 2027 |
| Final declaration | Whole 2026/27 tax year | 31 January 2028 |
Your tax payments do not change: the balancing payment and payments on account are still due on 31 January and 31 July.
What about penalties?
MTD for Income Tax uses a points-based system for late submissions. Each late quarterly update earns a penalty point, and a £200 penalty is charged once you reach the points threshold. For people who joined in April 2026, HMRC has confirmed a softer start: late quarterly updates for the 2026/27 tax year will not attract penalty points. The final declaration and tax payments are not covered by this, so normal deadlines still apply.
How to get ready for Making Tax Digital
- Check your qualifying income for the relevant tax year, adding together all your self-employment and property income before expenses.
- Choose MTD-compatible software that suits how you work. Your accountant can recommend options and set up your categories correctly.
- Move your records online. Connect your business bank account, and get into the habit of capturing receipts as you go rather than at the end of the year.
- Sign up or authorise an agent. You can sign up yourself on GOV.UK, or authorise your accountant to act for you and handle the submissions.
- Agree a quarterly routine so that each update is reviewed before it is sent and nothing is left until the deadline.
How Chalmers & Partners can help
Our team in London helps sole traders and landlords move to Making Tax Digital without disruption. We can check whether and when MTD applies to you, set up software, keep your records up to date and submit your quarterly updates and final declaration on your behalf. Find out more about our income tax and Self Assessment services or book a consultation.
This article provides general information for the 2026/27 tax year and is not personal tax advice. Rules and rates can change, so please speak to an accountant about your own circumstances.
