Making Tax Digital

Content copied from the current MRS Bookkeeping page and restyled for this static site. Source last modified: 2026-10-23. Review before public deployment.

Making Tax Digital for Income Tax is now in force for the first group of sole traders and landlords.

If your qualifying income was over £50,000 on your 2024–25 Self Assessment tax return, you should have been keeping digital records under MTD since April 2026. The first quarterly-update deadline has passed. The next deadline is 7 November 2026.

If you are affected and have not completed everything you expected to complete, do not ignore it and do not assume it is too late to put matters right. Establish what has been done, bring the records up to date and deal with the outstanding steps in the right order.

This page was checked against current HMRC guidance on 23 October 2026. It provides general information, not individual tax advice.

On this page

1. Who must use MTD for Income Tax?
2. What qualifying income means
3. The phased start dates
4. The 2026–27 deadlines
5. What to do if you missed the August update
6. What MTD requires in practice
7. What quarterly updates are — and are not
8. Your practical readiness check
9. How MRS Bookkeeping can help
10. If you already have an accountant
11. Responsibilities and service boundaries
12. Your next step
13. Official guidance and last review

1. Who must use MTD for Income Tax?

You may need to use MTD for Income Tax if you:

• are registered for Self Assessment and have submitted a tax return;
• receive income from self-employment as a sole trader, property as a landlord, or both; and
• have qualifying income above the relevant threshold.

The rules do not apply merely because you have some PAYE employment income. They are concerned with qualifying income from self-employment and property.

Your circumstances can affect whether an exemption or another special rule applies. If you are uncertain, check HMRC's guidance or obtain advice appropriate to your circumstances.

2. What qualifying income means

Qualifying income is broadly your gross income before expenses from self-employment and property, added together. It is based on the relevant Self Assessment tax return.

It is not the same as profit.

For example, if a person has £38,000 of gross self-employment income and £14,000 of gross property income, their combined qualifying income is £52,000 before expenses.

3. The phased start dates

If you are below the present threshold, it is still sensible to establish which later phase may affect you. Good digital records are useful before MTD becomes compulsory.

Not sure which phase applies to you? Use the free MRS Bookkeeping MTD for Income Tax checker. It gives a general indication based on the information you enter in your browser and links to the relevant HMRC guidance. It does not replace advice about your individual circumstances.

4. The 2026–27 deadlines

For people who entered MTD for Income Tax in April 2026, the first-year timetable is:

The normal deadline for the separate 2025–26 Self Assessment return is 31 January 2027.

Quarterly updates use either standard update periods or calendar update periods. HMRC's current rules make each update cumulative from the beginning of the tax year or relevant period to the end of that update period. Compatible software creates and sends the required totals.

For a focused timetable and preparation reminders, see the free MTD for Income Tax deadlines guide.

5. What to do if you missed the August update

HMRC will not apply penalty points for late quarterly updates for the 2026–27 tax year. That does not mean the updates are optional.

You still need to:

1. establish whether MTD applies to you;
2. check whether HMRC has signed you up and whether your software is correctly connected;
3. bring the required digital records up to date;
4. send any outstanding quarterly update through compatible software; and
5. prepare for the next deadline on 7 November 2026.

All required quarterly updates must be sent before the MTD tax return can be submitted. Penalties can still apply to a late tax return or late payment.

If your first update is outstanding, act promptly. MRS Bookkeeping can help you establish the current position, organise the records and agree the practical work required. Formal tax advice remains outside the current MRS Bookkeeping service scope.

The free plain-English MTD penalties guide explains the difference between late quarterly updates, a late annual return and late payment, with direct links to HMRC.

6. What MTD requires in practice

MTD for Income Tax is more than sending four figures during the year. An affected person needs to:

• keep the required self-employment and property records digitally;
• use software that is compatible with MTD for Income Tax;
• maintain the records regularly and correct known errors;
• send a quarterly update for each relevant source of self-employment or property income;
• check and complete the year-end information; and
• submit the tax return using compatible software.

Software helps with the process, but it cannot repair missing source records or decide what an unexplained transaction represents. A reliable system starts with complete evidence, clear routines and timely decisions.

For a fuller self-help explanation of eligibility, qualifying income, software, digital records, quarterly updates and exemptions, use the free MRS Bookkeeping MTD for Income Tax guide.

7. What quarterly updates are — and are not

A quarterly update is a summary of income and expense information produced from the digital records held in compatible software. It is not a separate full tax return.

HMRC says accounting and tax adjustments do not have to be made before a quarterly update is sent. However, the underlying digital records should still be kept accurately and known errors should be corrected.

The estimate shown after an update may help with planning, but it is not necessarily the final tax bill. Reliefs, allowances, other income, gains and later adjustments can change the eventual result.

8. Your practical readiness check

Ask yourself:

• Do I know whether MTD applies to me now, in 2027 or in 2028?
• Do I know the qualifying income shown by the relevant tax return?
• Has HMRC confirmed my position?
• Is my compatible software set up for the correct businesses and property sources?
• Are all business bank and payment accounts connected or otherwise recorded?
• Can I find my sales records, purchase evidence, invoices, receipts and statements?
• Are business and personal transactions clearly distinguished?
• Are the records up to date through the end of the current update period?
• Can I explain uncategorised or unusual transactions?
• Do I know who is responsible for each submission — me, MRS Bookkeeping or another accountant?
• Is there enough time for questions and approval before the deadline?

If several answers are "no" or "not sure", begin with a records and responsibilities review rather than buying another app or waiting for the deadline.

9. How MRS Bookkeeping can help

Subject to onboarding, the agreed written scope and any necessary HMRC authorisation, MRS Bookkeeping can help with:

• assessing MTD readiness and identifying practical gaps;
• organising or recovering incomplete financial records;
• setting up and maintaining an appropriate bookkeeping workflow;
• recording, categorising and reconciling transactions;
• helping connect suitable compatible software;
• preparing and sending agreed MTD quarterly updates;
• preparing the related Self Assessment tax return;
• routine HMRC administration for an authorised client; and
• working alongside an existing accountant where responsibilities are agreed.

MRS Bookkeeping is supervised by HM Revenue & Customs for anti-money laundering purposes and is separately registered with HMRC as a tax agent.

The exact work, deadlines, information required, price, responsibilities and exclusions will be recorded in writing before work begins.

10. If you already have an accountant

You do not need to replace your accountant to obtain practical bookkeeping or MTD support.

MRS Bookkeeping may be able to maintain or recover the underlying records, prepare information in the format your accountant needs and carry out agreed MTD administration. Before work starts, the division of responsibility should be clear so that no task is duplicated or missed.

In particular, confirm who will:

• maintain the digital records;
• review unresolved transactions;
• send each quarterly update;
• prepare and submit the year-end tax return; and
• communicate with HMRC if a problem arises.

11. Responsibilities and service boundaries

MRS Bookkeeping can perform only the work included in the written engagement. You remain responsible for providing accurate, complete and timely information, reviewing information put before you and paying tax by the relevant deadline.

Formal tax advice, complex tax planning, tax investigations, legal advice, employment-law advice, pension advice and regulated financial advice are outside the standard service scope. If specialist work is needed, this will be explained and an appropriate referral may be suggested.

See the Service Scope and Responsibilities page for the full boundary matrix and the AML / Service Scope page for MRS Bookkeeping's regulatory status and safeguards.

12. Your next step

If MTD applies to you now and your records or submissions are not up to date, the most useful first step is a short position review.

Please use the Contact page and say:

• whether you are a sole trader, landlord or both;
• whether you received an MTD notice or other HMRC communication;
• which bookkeeping software, if any, you use;
• whether the August update was sent; and
• whether you already have an accountant.

Please do not email bank statements, tax records, identity documents or other confidential material until a secure handover method has been agreed.

13. Official guidance and last review

Official sources:

• Using Making Tax Digital for Income Tax for the first time
• Send quarterly updates
• Sign up for Making Tax Digital for Income Tax
• Penalties for Making Tax Digital for Income Tax

Free MRS Bookkeeping tools and explanations:

• Check your likely MTD position
• Read the fuller MTD for Income Tax guide
• Check deadlines and preparation reminders
• Understand the penalties
• Browse the directory of official HMRC sources

Last reviewed: 23 October 2026

Next scheduled review: no later than 15 January 2027, or sooner if HMRC changes its guidance.