Making Tax Digital for Income Tax 2026/27: Who Must Sign Up, Deadlines and Software

Updated October 24, 2026. Making Tax Digital (MTD) for Income Tax is now live for the first group of UK sole traders and landlords. If your qualifying income was more than £50,000 in the 2024–25 tax year, you may need to keep digital records, send quarterly updates, and complete your 2026–27 tax return through compatible software. This is a change in how you report income, not a new tax.

The difficult part is usually not the software. It is working out whether the £50,000 test applies to your gross qualifying income, which deadline belongs to which tax year, and how MTD fits alongside the final Self Assessment return you still have to file for 2025–26. This guide puts those decisions in one place and links to HMRC’s current instructions.

Making Tax Digital for Income Tax: the short answer

MTD for Income Tax is HMRC’s digital reporting process for individuals with income from self-employment, property, or both. When the rules apply to you, you use HMRC-recognised software to:

• keep and correct digital records of your self-employment and property income and expenses;
• send four quarterly updates that summarise those records; and
• complete the annual tax return and pay any tax due by January 31 after the end of the tax year.

A quarterly update is not a tax return and it is not a separate tax bill. It gives HMRC a running summary of the figures in your digital records. You still check the year’s totals, add other income and claims, make adjustments, submit the annual return, and pay the final amount by the normal tax deadline.

If you are preparing the previous year’s return, see Horus Valley’s HMRC Self Assessment 2025–26 deadline guide. That article covers the return due by January 31, 2027; this guide focuses on the MTD reporting year that starts on April 6, 2026.

Who must use MTD in 2026/27?

For the 2026–27 tax year, the first group generally has all of these characteristics:

1. You are an individual registered for Self Assessment.
2. You receive income from self-employment, property, or both.
3. Your qualifying income was more than £50,000 in the 2024–25 tax year.
4. No automatic or approved exemption applies to you.

The threshold is based on gross qualifying income, before expenses and tax. It is not the profit left after deducting allowable costs. If you have more than one sole-trader activity or property income as well as trading income, consider the qualifying sources together rather than checking each one in isolation.

The rollout then widens:

HMRC’s definition is important: qualifying income is the combined gross income from self-employment and property. Salary, pensions, savings interest, and dividends may still need to be reported on the annual tax return, but they are not added to the qualifying-income test in the same way.

Gross income examples

These examples are only to show how the threshold works; they do not calculate tax.

• A sole trader receives £54,000 from customers and has £18,000 of allowable costs. The qualifying income is £54,000, so the person is above the 2026–27 starting threshold even though the profit is £36,000.
• A landlord receives £32,000 in rent and a sole trader receives £21,000 in sales. The combined qualifying income is £53,000, so the two sources should not be tested as if they were unrelated.
• A sole trader receives £45,000 in sales and £12,000 from employment. The employment income does not turn the self-employment figure into £57,000 for the MTD qualifying-income test, although it may still be relevant to the annual tax return.

If your figures are close to a threshold, use HMRC’s check when you need to use MTD for Income Tax and compare the result with the income shown on the relevant Self Assessment return. Do not rely on an old article that describes the threshold as profit or uses only one of several income sources.

The 2026/27 MTD deadlines

Most people whose accounting period follows the UK tax year use the standard update periods. Each update is cumulative: the second update includes the period from the start of the tax year through October 5, not only the transactions from July 6 to October 5.

If your accounting period ends on March 31, you can use calendar update periods instead. The deadlines stay the same, but the periods end on June 30, September 30, December 31, and March 31. Confirm the choice in your software before you start creating records, because the period setting changes what each update covers.

Do not mix up the 2025/26 Self Assessment deadline

The first MTD year does not erase the previous Self Assessment obligation. You still submit your 2025–26 Self Assessment return through the existing route by January 31, 2027, and pay the tax due by that deadline. Your first MTD quarterly update belongs to 2026–27 and is a separate reporting step.

The annual return for the 2026–27 MTD year is due by January 31, 2028. Compatible software should bring the year’s digital records into the return, but you remain responsible for checking the figures, adding other income or gains, claiming reliefs, making adjustments, and paying the bill.

What a quarterly update includes

The quarterly process is designed to provide a simple summary of business and property income and expenses from the digital records. It is not four full tax returns and it is not an instruction to pay tax every three months.

Before sending an update, check that:

• transactions are recorded in the right business or property source;
• income is not duplicated between a bank feed and a manual entry;
• expenses have a sensible category and supporting record;
• the update period in the software matches your accounting period; and
• corrections have been made in the digital records rather than hidden in a separate spreadsheet.

HMRC says records should be created as close to the transaction date as possible. If you sign up partway through the year, you may need to catch up from the start of the tax year before the first update can be sent. For 2026–27, HMRC says there are no penalty points for missing a quarterly-update deadline, but you still need to create the records, send the updates, and complete the annual return.

Choosing MTD-compatible software

HMRC does not supply a single MTD application. You choose software that has gone through HMRC’s recognition process and is suitable for your records. HMRC’s software guidance describes two broad routes.

Full accounting software

This type of product creates the digital records and may connect to a business bank account, scan receipts, calculate totals, send quarterly updates, and submit the annual return. It can be the simplest option if you are starting from paper records or need to manage several income sources.

Spreadsheet plus bridging software

You may be able to keep records in a spreadsheet and use recognised bridging software to connect those records to HMRC. This is not the same as emailing or uploading a spreadsheet manually. The digital links and product capabilities must satisfy the MTD requirements, so confirm that the chosen bridging product supports the exact submissions you need.

Before choosing, check these practical points:

• Does it support both self-employment and property income if you have both?
• Can it handle more than one business or property source?
• Does it support your standard or calendar update periods?
• Can it submit the annual return as well as quarterly updates?
• Is an accountant or other agent able to work with the account if you need help?
• What happens if your business grows or a new income source starts?
• Is the free or low-cost plan limited by transactions, accounts, or submissions?

You can use HMRC’s software finder rather than choosing a product only because it appears in a search advert. HMRC recognises products but does not recommend a particular provider. Also be wary of messages asking you to pay a “registration fee” or provide banking details through a shortened link; start from GOV.UK or the software provider’s verified site.

How to get ready and sign up

Use this sequence for a clean setup:

1. Check the correct tax year. Look at your 2024–25 gross self-employment and property income, not just your profit. Include relevant sources together.
2. Check the exemption position. Some exemptions are automatic and others require an application. If you are digitally excluded, do not assume that using paper records once is enough; HMRC considers the circumstances and asks you to apply.
3. Choose compatible software. Decide whether you need full accounting software, a spreadsheet with bridging software, or an authorised agent.
4. Sign up through HMRC. Use the official MTD service and keep your HMRC account details private. HMRC has also begun contacting and signing up some people whose records show qualifying income above £50,000 for 2024–25.
5. Authorise the software. Connect the chosen product to HMRC before creating the year’s digital records. Check the accounting-period setting inside the product.
6. Create or import records from the start date. For standard periods, that is April 6, 2026. For calendar periods, the software may use the calendar-period arrangement described above.
7. Review before each update. Reconcile transactions, correct errors, and save evidence for the figures. Send the update before the applicable deadline and keep the confirmation.
8. Finish the year. Use the software to add other income, gains, reliefs, and adjustments, submit the annual tax return by January 31, 2028, and pay the bill.

If HMRC has already signed you up, check the message in your HMRC online account rather than starting a second sign-up. HMRC’s “signed you up” guidance explains how to choose software, catch up on records, and deal with an overdue update.

Exemptions and people who need extra support

If you are exempt, you continue to report income and gains through Self Assessment as normal. HMRC lists automatic exemptions and exemptions that require an application. Digital exclusion can include circumstances involving age, health, disability, incompatible religious practice, or lack of suitable internet access, but HMRC considers applications case by case.

A paper-based history, unfamiliarity with accounting software, or the fact that you have only a small number of records is not automatically enough by itself. Read HMRC’s current exemption guidance and use the contact method it specifies. Keep normal tax records while an application is being considered, and follow the decision letter.

Penalties: what changes in 2026/27?

There are two separate ideas here: missing a quarterly update and failing to submit or pay the annual tax return.

For the 2026–27 tax year, HMRC says there are no penalty points for missing a quarterly-update deadline. That does not make the update optional: you still need to catch up, keep the digital records, and send the final update before completing the annual return.

For tax years after 2026–27, late quarterly updates can create points under the new system. HMRC’s current guidance says four points normally trigger a £200 penalty, with another £200 for each later missed submission deadline once the threshold has been reached. The annual return and payment deadlines still matter, and late-payment interest or other penalties can apply according to the tax year and your circumstances.

For the previous 2025–26 tax return, the current Self Assessment penalty rules still apply. That is another reason to keep the January 31, 2027 Self Assessment deadline separate from the MTD timetable.

Read the official MTD penalties guidance before relying on an older penalty calculator. Penalty rules are a poor place to copy advice from a static blog post because HMRC can change the transition treatment or the tax year to which a rule applies.

MTD and Self Assessment: the difference at a glance

The two systems overlap. MTD changes the record-keeping and reporting route for eligible sources; it does not remove the need to give HMRC the rest of the information needed for the annual tax calculation.

A practical checklist before your next deadline

Save this short checklist with your bookkeeping routine:

• Confirm whether you are in the 2026–27 group using gross qualifying income from 2024–25.
• Make sure your software is recognised for MTD for Income Tax, not only MTD for VAT.
• Confirm that the software covers every relevant self-employment and property source.
• Check whether you use standard or calendar update periods.
• Record transactions digitally from the start date and keep source evidence.
• Reconcile bank feeds and remove duplicate entries before sending an update.
• Send the next update by the deadline shown in your software and HMRC account.
• Keep the 2025–26 Self Assessment deadline of January 31, 2027 separate from the MTD deadlines.
• Plan for the 2026–27 annual return and payment deadline of January 31, 2028.
• If you think an exemption applies, read HMRC’s current criteria and apply through the official contact route.

For the official step-by-step process, use HMRC’s first-time MTD timetable, quarterly-update instructions, and software guidance. If you run into a separate HMRC app or account sign-in problem, Horus Valley’s HMRC app login and identity-verification guide covers that narrower troubleshooting intent.

This guide is general information for UK taxpayers and landlords. Your accounting period, residence, income sources, agent arrangement, exemption status, and HMRC notices can change what applies. Check the official guidance or speak with a qualified tax adviser when the figures or deadline are uncertain.