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What to do now
- Check if you are affected, and when. Over £50,000 of qualifying income from April 2026, over £30,000 from April 2027, over £20,000 from April 2028.
- Move to compatible software. Keeping digital records now makes the switch painless.
- Get used to quarterly updates. You will send HMRC a summary each quarter, then a final declaration after the year end.
- Tidy your records. Clean, current bookkeeping is the foundation that makes quarterly reporting quick.
Not sure if Making Tax Digital affects you?
The thresholds and dates catch people out. TaxTune checks when you are affected, sets up the right software, and handles your quarterly updates so it is one less thing to worry about.
Who is caught, and from when
Making Tax Digital for Income Tax does not arrive for everyone at once. It is being phased in by income level, and the level that matters is your qualifying income, not your profit.
- Qualifying income over £50,000. You are in from 6 April 2026. That is now. HMRC tested this on your 2024/25 tax return.
- Qualifying income over £30,000. You join from 6 April 2027, tested on your 2025/26 return.
- Qualifying income over £20,000. You join from 6 April 2028, tested on your 2026/27 return.
Notice the two year lag. HMRC looks at the return you filed for the tax year two years before the one you are being mandated into. So the return you are filing this coming January decides whether you are in from April 2028, which is why it is worth knowing where you stand well before the letter arrives.
What qualifying income actually means
This is the part people get wrong, and it usually works against them. Qualifying income is your turnover before expenses from self employment and property combined. It is not your profit.
So a landlord with £28,000 of rent and a small consultancy turning over £25,000 has qualifying income of £53,000, even if the profit after costs is nowhere near that. That person is already in Making Tax Digital.
What counts: self employment turnover, property income including your share of jointly owned property, and VAT where you include it in your declared business income. What does not count: employment income taxed under PAYE, partnership profit shares, dividends, state and private pensions, and transition profits from basis period reform.
What you actually have to send
Four quarterly updates a year, plus a final declaration after the year end. The quarterly update is a summary of income and expenses by category, not a list of individual transactions, and it is cumulative from 6 April, so each one restates the year to date rather than just the quarter.
- Quarter to 5 July, due 7 August
- Quarter to 5 October, due 7 November
- Quarter to 5 January, due 7 February
- Quarter to 5 April, due 7 May
You can elect to use calendar quarters instead, ending 30 June, 30 September, 31 December and 31 March, with the same seventh of the month deadlines. The final declaration is still due by 31 January after the tax year end, exactly as your tax return is now.
The records themselves have to be kept digitally, in software that can talk to HMRC. A shoebox of receipts and a spreadsheet you retype at the year end will not meet the requirement.
The penalties, and the easing in year one
Once you are in Making Tax Digital you leave the old £100 late filing penalty behind and move onto a points system.
Late submission. One point per missed deadline. At 4 points you get a £200 penalty, and another £200 for every further miss while you are at the threshold. Points drop off automatically after 24 months, or clear entirely after a period of filing on time.
There are no penalties for missing a quarterly update deadline in the 2026/27 tax year. That is a genuine easing for the first cohort, and it runs out from 2027/28. The annual return deadline does still carry a point from 2026/27.
Late payment. Nothing if you pay within 15 days. For 2026/27 it is 3% of what is outstanding at day 15, a further 3% at day 30, then interest running at 10% a year charged daily from day 31. In your first year in Making Tax Digital you get 30 days rather than 15 to pay or agree a payment plan. Payments on account are outside this, so a late payment on account does not trigger a penalty.
Who does not have to do it
Some people are out automatically, with nothing to apply for: partnerships, anyone with qualifying income of £20,000 or less, trusts, personal representatives of someone who has died, and people without a National Insurance number before the start of the tax year. Others are out only until April 2027, including those claiming averaging relief or qualifying care relief.
Separately, you can apply to be treated as digitally excluded on grounds of age, disability, health, location or religious belief. That one is an application, not automatic, and it is worth making early rather than after a deadline has passed.
What we would do if this were us
Work out your qualifying income for the relevant test year first, because everything else follows from it. If you are already over £50,000 you are in now and the priority is getting records into software that files quarterly. If you are below the line, use the breathing space rather than the deadline. Moving bookkeeping onto software in a quiet month is a different experience from doing it three weeks before a filing date.
Let us get you MTD ready
We set up your digital records and software, and handle your quarterly updates and final declaration. Fixed fee, no scramble.
Frequently asked questions
When does Making Tax Digital for Income Tax start?
April 2026 for self employed people and landlords with qualifying income over £50,000, then April 2027 for over £30,000 and April 2028 for over £20,000.
What do I need to do to prepare?
Check whether and when you are affected, move to compatible software, and get used to keeping digital records and reporting quarterly. Preparing early avoids a scramble.
What changes under Making Tax Digital?
Instead of one annual return, you keep digital records and send HMRC a quarterly update, then a final declaration after the year end.
What counts as qualifying income?
Broadly your gross self employment and property income before expenses. If the combined figure is over the relevant threshold, you are brought into the scheme.
What if my income is under the threshold?
You are not required to join yet, but keeping digital records now makes the eventual switch painless if your income grows.