Making Tax Digital UK is changing how many self-employed people, sole traders and landlords keep records and report income to HMRC. The change is being introduced in stages, so the date you need to start depends on your qualifying income and your circumstances.

The first mandatory phase of Making Tax Digital for Income Tax UK began on 6 April 2026 for relevant individuals with qualifying income above £50,000. The threshold then falls to more than £30,000 from April 2027 and more than £20,000 from April 2028.

MTD is not a new tax. It is a change to the way eligible taxpayers keep digital records, send information to HMRC and complete their annual tax reporting.

This guide explains the Making Tax Digital rules UK, including who needs to use MTD, the April 2026 and April 2027 changes, digital records, MTD software, quarterly updates, Self Assessment, VAT and the practical steps you can take to prepare.

What Is Making Tax Digital for Income Tax and How Does MTD Work?

Making Tax Digital, often shortened to MTD, is HMRC’s move towards a more digital tax reporting process.

For people who fall within MTD for Income Tax, the system connects everyday bookkeeping with HMRC reporting. Instead of keeping business information separately and only dealing with it at the end of the year, eligible taxpayers use compatible software to maintain digital records and send regular summaries.

In simple terms, the process looks like this:

Record income and expenses → use compatible software → send quarterly updates → complete the annual tax return → pay tax due.

What Does “Make Tax” Digital Mean for UK Taxpayers?

The phrase make tax digital can sound technical, but the basic idea is simple.

HMRC wants eligible taxpayers to keep their relevant business and property records digitally. The software then uses those records to produce the information required for MTD reporting.

A digital approach can also make it easier to identify missing transactions or errors during the year.

However, MTD is not simply about buying an accounting application. You need to understand the rules, use appropriate software and maintain accurate records.

Making Tax Digital for Income Tax: The Digital Tax System

Making Tax Digital for Income Tax applies to relevant individuals with income from areas such as self-employment and property.

HMRC explains that the system requires compatible software to create and preserve digital records, send quarterly updates and support the submission of the annual tax return.

The result is a more connected digital tax process.

Your software can hold your income and expense information, produce quarterly summaries and help you understand your estimated tax position.

Who Will Need to Use Making Tax Digital?

Not everyone needs to use MTD at the same time.

The first mandatory group started from April 2026. Other taxpayers will enter the system in later stages.

Your position depends on factors such as:

Your qualifying income.
Whether you have self-employment income.
Whether you have property income.
The relevant tax year.
Whether an exemption applies.

This is why checking your actual circumstances is more useful than simply asking whether all sole traders or landlords must use MTD.

Making Tax Digital Rules UK: When Does MTD Start?

The Making Tax Digital 2026 UK changes are particularly important because the first mandatory phase is now underway.

HMRC’s current guidance sets out three main thresholds for the staged rollout.

April 2026: The First MTD for Income Tax Deadline

From 6 April 2026, MTD for Income Tax applies to relevant individuals whose qualifying income was more than £50,000 for the 2024–25 tax year.

This first group includes qualifying sole traders and landlords.

For people in this group, digital records and MTD reporting are now part of their tax obligations.

HMRC’s current guidance says taxpayers using standard update periods begin creating digital records from 6 April 2026. Those using calendar update periods may begin from 1 April 2026.

April 2027: The Next MTD Threshold

From 6 April 2027, MTD for Income Tax expands to individuals with qualifying income of more than £30,000 based on the 2025–26 tax year.

This means more self-employed people and landlords will need to prepare.

If your income was below the first threshold, do not assume MTD will never apply to you. The threshold is reducing.

April 2028 and Future MTD Changes

From 6 April 2028, the threshold reduces again to more than £20,000, based on qualifying income for the 2026–27 tax year.

The rollout therefore looks like this:

Start date	Qualifying income
6 April 2026	More than £50,000
6 April 2027	More than £30,000
6 April 2028	More than £20,000

These figures relate to qualifying income under the MTD rules. They should not be treated as a simple calculation based on every type of income you receive.

MTD for Income Tax UK and the Tax Year

The tax year is important when working out whether you fall into a particular MTD phase.

HMRC defines qualifying income for the rollout as total gross income from self-employment and property before expenses and tax.

That means you should check the relevant income and tax year rather than relying on your current turnover alone.

Who Needs to Use Making Tax Digital for Income Tax?

The main groups entering MTD for Income Tax are sole traders and landlords who meet the relevant qualifying-income threshold.

Making Tax Digital Sole Traders UK

The topic of Making Tax Digital sole traders UK is especially important from 2026 onwards.

A sole trader who falls within the relevant threshold needs to use compatible software to maintain digital records and report the required information.

This does not mean every sole trader has exactly the same setup.

For example, one person may have a single self-employment business, while another may operate more than one business and also receive property income.

The second situation requires more careful bookkeeping.

A qualifying sole trader generally needs to:

Keep digital records.
Use compatible software.
Send quarterly updates.
Complete the annual tax-return process.
Pay the tax due by the applicable deadline.

Making Tax Digital Landlords UK

Making Tax Digital landlords UK is another important area of the rollout.

A landlord with qualifying property income may need to use MTD once the applicable threshold and start date apply.

This can make regular bookkeeping more important because rental income and property expenses need to be organised throughout the year.

A landlord should keep clear records for each relevant property and make sure income and expenses are categorised correctly.

Sole Traders and Landlords With Qualifying Income

The phrase sole traders and landlords covers two major audiences for MTD for Income Tax.

The key issue is qualifying income.

A person with both self-employment and property income should consider the complete picture rather than looking at only one source.

This is particularly important where someone runs a business and receives rental income at the same time.

Self-Employed Individuals and Property Income

Self-employed individuals and landlords may have different reporting requirements depending on their income sources.

A sole trader may have sales, business expenses and other taxable income.

A landlord may have rent, property-related expenses and other income.

Someone with both types of income needs a bookkeeping system that can keep these activities properly organised.

What Are the Making Tax Digital Requirements UK?

The main Making Tax Digital requirements UK concern digital record keeping, compatible software and regular reporting.

Qualifying Income and Income From Self-Employment

Qualifying income is one of the most important terms to understand.

For the MTD rollout, HMRC uses total gross income from self-employment and property when determining which threshold applies.

Do not automatically assume that your profit after expenses is the figure used for the threshold.

The definition of qualifying income is important.

Business Income, Property Income and Income Sources

Your business income and property income should be recorded accurately.

You may also have other income sources, such as savings or dividends, that need to appear in your annual tax return.

HMRC’s guidance explains that other income sources may need to be added to the tax return even though they are not necessarily part of the digital records for self-employment and property income.

Income and Expense Records

MTD relies on accurate income and expense information.

Your records should make it clear:

What income you received.
When you received it.
What expenses you paid.
When those expenses occurred.
Which category each transaction belongs to.

This gives you a reliable foundation for quarterly reporting and your annual tax return.

How to Register for MTD and Sign Up for Making Tax Digital

Once you know that MTD applies, you need to get your systems ready.

When You Need to Register for MTD

If you register for MTD, you will need to use compatible software and connect it to HMRC.

The timing depends on your MTD obligations.

Do not treat registration as the only preparation step. Your bookkeeping system should also be ready.

How to Use Making Tax Digital With HMRC

To use Making Tax Digital, you need software that works with the MTD service.

HMRC’s current guidance says taxpayers need to authorise their compatible software so it connects with HMRC. You also need to check your accounting period in the software.

The basic process is:

Choose compatible software.
Sign up for the relevant MTD service.
Connect and authorise the software.
Check your accounting period.
Create digital records.
Send quarterly updates.
Submit your annual tax return.

Prepare for Making Tax Digital Before Your Start Date

It is better to prepare for Making Tax Digital before your legal start date.

Start by checking your bookkeeping.

Then decide whether your existing system can continue or whether you need new software.

You should also check whether your accountant or bookkeeper supports the software you intend to use.

What Is a Digital Record and How Does Digital Record Keeping Work?

Digital records are central to the MTD system.

What Income and Expense Information Must Be Recorded?

A digital record is information about income or expenses that is created and stored using software compatible with MTD for Income Tax.

HMRC says the digital record needs information including the amount, date and category of the income or expense.

This applies to relevant self-employment and property income and expenses.

Keep Digital Records and Supporting Documents

You need to keep digital records, but that does not mean all supporting paperwork can be ignored.

Invoices, receipts, bank statements and other supporting documents can still be important evidence for your tax records.

Good bookkeeping therefore combines digital records with the documents that support them.

Digital Records and Submit Information to HMRC

Your software uses the digital records to prepare quarterly totals.

HMRC does not receive every individual receipt or invoice through the quarterly update.

Instead, the quarterly update contains totals for the relevant income and expense categories.

This is an important difference between maintaining records and submitting information.

What Are MTD Quarterly Updates?

Quarterly updates are one of the biggest practical changes under MTD for Income Tax.

How a Quarterly Update Works

Every three months, your compatible software adds together the relevant digital records.

It creates totals for your self-employment and property income and expenses.

These totals are sent to HMRC as a quarterly update.

HMRC clearly states that quarterly updates are summaries, not tax returns.

MTD Quarterly Updates UK: Reporting Periods and Deadlines

For standard update periods, the current deadlines are:

Update period	Deadline
6 April to 5 July	7 August
6 April to 5 October	7 November
6 April to 5 January	7 February
6 April to 5 April	7 May

The first mandatory group has already reached its first reporting cycle.

HMRC confirmed that the first quarterly update for the 2026–27 tax year was due by 7 August 2026.

One detail is easy to miss: each quarterly update covers information from the start of the tax year to the end of that update period. It does not only cover the previous three months.

Do Quarterly Updates Replace Your Tax Return?

No.

Quarterly updates do not replace the annual tax return.

HMRC says taxpayers still need to complete the tax-return process.

Think of quarterly updates as regular summaries during the year.

The annual tax return is where you finalise your tax position.

Self Assessment and the Annual Tax Return Under MTD

MTD and Self Assessment work together.

Income Tax Self Assessment and MTD

Income Tax Self Assessment remains part of the UK tax system.

MTD changes how relevant taxpayers maintain and report certain information during the year.

It does not mean that Self Assessment disappears.

Self Assessment Tax Return After Quarterly Updates

Your self assessment tax return remains important.

At the end of the year, your software will show the income and expenses recorded for your businesses.

You can check the information and make relevant adjustments.

HMRC explains that you may also need to add other income sources, gains, reliefs and allowances before submitting the final return.

Submit Your Tax and Pay Your Tax Bill

You will still need to submit your tax return and pay your tax bill by the applicable deadline.

For the first mandatory MTD tax year, HMRC’s guidance gives 31 January 2028 as the deadline for the relevant 2026–27 tax return.

The key point is simple:

Quarterly reporting does not remove the annual tax return or the need to pay your tax.

Making Tax Digital Software UK: What Software Do You Need?

Choosing the right technology is a major part of MTD preparation.

Making Tax Digital Software and Compatible Software

Making Tax Digital software UK must support the functions you need.

HMRC says software for MTD for Income Tax needs to:

Create digital records.
Send quarterly updates to HMRC.
Submit the tax return.

You can use one software product for everything or combine more than one product where the setup meets the rules.

Accounting Software and MTD Software

Accounting software can help you record transactions throughout the year.

Good MTD software may include features such as:

Income tracking.
Expense recording.
Bank feeds.
Reconciliation.
Digital record storage.
Quarterly reporting.
Tax-return submission.

The right option depends on the size and complexity of your business.

Software Providers and HMRC-Recognised Software

There are many software providers offering MTD solutions.

HMRC provides a software finder containing products that have gone through its recognition process.

However, HMRC does not provide the software itself.

You should also remember that HMRC recognition does not mean a product is automatically the best choice for your business.

How to Choose the Right Software

The right software should fit your actual needs.

A simple sole trader may want a straightforward bookkeeping system.

A landlord with several properties may need stronger property accounting features.

Before choosing software, check:

MTD compatibility.
Quarterly update support.
Tax-return submission.
Other income sources.
Accountant access.
Bank integration.
Pricing.
Ease of use.
Record storage.

Can You Use Spreadsheets and Bridging Software for MTD?

You do not necessarily need to abandon spreadsheets.

Digital Software and Bridging Software

HMRC confirms that taxpayers can continue using spreadsheets for their records in suitable circumstances.

However, they still need software that links the spreadsheet information to HMRC. This is often called bridging software.

This can be useful for people who already have a structured spreadsheet system.

Use Compatible Software to Keep Digital Records

You can use compatible software to connect your bookkeeping records with HMRC.

If you use more than one product, the products need to be connected correctly.

HMRC says that when more than one product is used, the relevant records need to be digitally linked.

Digital Records and Submit Returns

The phrase digital records and submit returns describes two connected parts of the process.

Your record-keeping software stores the relevant information.

Your compatible submission software sends the required information to HMRC.

If you use multiple products, make sure the data transfer meets the digital-link requirements.

HMRC says that after a digital record has been sent to HMRC in a quarterly update, it must not be manually moved within the record-keeping software or to other software.

Making Tax Digital for VAT: How MTD for VAT Works

MTD for VAT is separate from the MTD for Income Tax rollout.

Making Tax Digital for VAT and VAT Return Requirements

Making Tax Digital for VAT applies to VAT-registered businesses subject to the MTD rules.

Businesses need appropriate digital records and compatible software to submit their VAT return.

This has already been part of the UK’s digital tax system for several years.

MTD for VAT Compared With MTD for Income Tax

It is important not to mix up the two systems.

MTD for VAT concerns VAT records and VAT Returns.

MTD for Income Tax concerns relevant self-employment and property income for qualifying individuals.

A business can be subject to MTD for VAT while an individual connected with that business may separately need to consider MTD for Income Tax.

VAT Digital Records and Digital Links

VAT record keeping can also involve multiple software systems.

Where HMRC’s digital-link rules apply, the information must move between relevant software products digitally.

This is why businesses should review their complete accounting setup rather than checking only whether their main accounting application is compatible.

How to Prepare for Making Tax Digital

Good preparation can make the transition much easier.

Prepare for Making Tax Digital Before April 2026

For the first group, April 2026 was the key start date.

For taxpayers entering later phases, there is still time to prepare.

The best approach is to treat MTD as a bookkeeping project rather than a last-minute tax deadline.

Get the Right Software in Place

Get your software in place before your first quarterly update.

Check that it can:

Create digital records.
Store income and expense information.
Send quarterly updates.
Submit the annual tax return.
Connect securely with HMRC.

HMRC says taxpayers need to authorise compatible software before creating digital records for MTD reporting.

Review Your Income and Expenditure

Review your income and expenditure regularly.

Look for:

Missing transactions.
Incorrect categories.
Duplicate entries.
Unreconciled bank transactions.
Missing invoices.
Property expenses recorded against the wrong property.

Regular checks make your quarterly update process much easier.

Check Your Tax Reporting Process

Your tax reporting process should cover the entire year.

Do not wait until the annual tax return to find out that some transactions are missing.

A simple monthly bookkeeping routine can reduce the pressure of each quarterly update.

Making Tax Digital Accountant UK: How an Accountant Can Help

Professional support can be valuable if your tax affairs are complicated.

MTD Support for Sole Traders and Landlords

A Making Tax Digital accountant UK can help you understand whether MTD applies and when you need to start.

An accountant may also review:

Qualifying income.
Digital records.
Bookkeeping categories.
MTD software.
Quarterly updates.
Annual tax returns.

This can be especially useful for businesses and landlords with multiple income sources.

Help With MTD Software and Quarterly Updates

An accountant or bookkeeper can help you select software that fits your business.

They may also help connect the software and review your bookkeeping before a quarterly update is submitted.

If an agent acts for you, HMRC provides specific processes for authorising that agent.

Managing Your Self-Assessment Tax and Annual Tax Return

An accountant can also help with your self-assessment tax obligations.

For example, they may review your annual figures, identify adjustments, check reliefs and allowances and prepare the annual tax return.

The exact service depends on the accounting firm, so check what is included before engaging an accountant.

Who Does Not Need to Use Making Tax Digital?

MTD does not apply to everyone immediately.

MTD Exemptions and Digital Exclusion

There are exemptions for some taxpayers.

HMRC recognises that some people may be unable to use digital services because of their circumstances.

If you believe you are digitally excluded, check the current HMRC exemption process.

Do not assume that being older, having a small business or using paper records automatically creates an exemption.

When MTD for Income Tax Applies

The phrase mtd for income tax applies depends on your qualifying income, relevant income sources and the applicable start date.

Someone below the current threshold may not need to start yet.

However, that could change as the thresholds reduce.

Businesses and Landlords With Different Circumstances

Businesses and landlords do not all have the same reporting needs.

Someone with one simple self-employment source may have a straightforward system.

A person with several businesses, rental properties and other income sources may need more advanced software and professional support.

Common Making Tax Digital Mistakes to Avoid

Waiting Too Long to Start Using Making Tax Digital

One common mistake is waiting until the first quarterly deadline.

If you need to start using Making Tax Digital, give yourself enough time to select software, connect it to HMRC and organise your records.

Choosing the Wrong MTD Software

Do not choose software simply because it is cheap or popular.

Check whether it supports the exact functions you need.

For example, some products may create records but not support every reporting requirement.

Failing to Keep Digital Records

Poor digital record keeping creates problems later.

If you do not update your records regularly, your quarterly figures may be incomplete.

HMRC recommends creating digital records as close as possible to the transaction date so your records remain current.

Missing a Quarterly Update

Missing an update can create compliance problems.

For the 2026–27 tax year, HMRC says penalty points will not be applied for late quarterly updates. However, you still need to send the updates before you can submit the tax return.

From the second year, points-based penalties apply. HMRC says four points can result in a £200 penalty for the relevant late-submission regime.

So it is better to build a routine now.

How to Comply With MTD and Manage Your Tax Liabilities

The simplest way to comply with MTD is to make digital bookkeeping part of your normal business routine.

Use MTD for Income Tax Correctly

To use MTD for Income Tax, you need appropriate software, accurate records and timely reporting.

Do not think of MTD as something you deal with only once a year.

Your bookkeeping should support your quarterly reporting throughout the tax year.

Keep Digital Records and Submit Tax Information

You need to keep digital records and submit the relevant information through compatible software.

The quarterly updates contain totals rather than every individual invoice or receipt.

That makes accurate categorisation particularly important.

Keep Your Software in Place Throughout the Tax Year

Keep your software in place and use it consistently.

If you change systems, make sure your historical records are preserved and your new setup remains compliant.

HMRC’s guidance also explains that taxpayers can use more than one software product, provided the relevant digital links and reporting requirements are met.

Frequently Asked Questions About Making Tax Digital UK

What Is Making Tax Digital UK?

Making Tax Digital UK is HMRC’s digital approach to tax records and reporting. For relevant taxpayers, it involves digital records, compatible software, quarterly updates and an annual tax return.

Does Making Tax Digital Apply to Sole Traders?

Yes. Qualifying sole traders can fall within MTD for Income Tax when their qualifying income is above the applicable threshold.

Does Making Tax Digital Apply to Landlords?

Yes. Landlords with qualifying income from relevant property activities can be required to use MTD for Income Tax.

What Is MTD for Income Tax?

MTD for Income Tax is the part of the Making Tax Digital programme that covers relevant income from self-employment and property.

When Does MTD Start in April 2026?

The first mandatory phase began on 6 April 2026 for relevant individuals with qualifying income above £50,000 based on the 2024–25 tax year.

Do I Still Need a Self-Assessment Tax Return?

Yes. Quarterly updates do not replace the annual return.

HMRC says you still need to submit the tax return after completing the relevant MTD reporting process.

Can I Use Spreadsheets for MTD?

Yes, spreadsheets can still form part of an MTD setup.

However, you may need bridging software to connect spreadsheet records to HMRC.

What Is MTD-Compatible Software?

MTD-compatible software is software that can perform the functions required for MTD, including creating digital records, sending quarterly updates and submitting the tax return.

Is Making Tax Digital the Same as Making Tax Digital for VAT?

No.

Making Tax Digital for VAT concerns VAT records and VAT Returns, while MTD for Income Tax covers qualifying self-employment and property income.

Final Thoughts on Making Tax Digital UK

Making Tax Digital UK is now an active part of the tax system for the first group of taxpayers.

The first MTD for Income Tax phase began on 6 April 2026, with the qualifying-income threshold reducing from more than £50,000 to more than £30,000 in April 2027 and more than £20,000 in April 2028.

For a qualifying sole trader or landlord, the process can be summarised simply:

Check your qualifying income → understand your start date → choose compatible software → create digital records → send quarterly updates → complete your annual tax return → pay your tax.

The biggest mistake is viewing MTD as four new tax returns.

It is not.

Quarterly updates are summaries of income and expenses, while the annual tax return remains part of the final reporting process.

If you are self-employed or receive property income, check your position early. Choose the right software, keep your records up to date and understand your deadlines.

For complicated tax affairs, a qualified UK accountant can also help you understand the requirements and set up a practical MTD process.

Making Tax Digital UK: Complete Guide to MTD for Income Tax