Making Tax Digital for Income Tax becomes mandatory for sole traders and landlords with qualifying income over £50,000

Making Tax Digital (MTD) for Income Tax became mandatory from April 2026 for sole traders and landlords with qualifying income over £50,000¹. Those affected must keep digital records and send quarterly updates to HM Revenue and Customs through recognised software¹. The first quarterly update period ran from 6 April 2026 to 5 July 2026 for most customers, with some using calendar update periods running from 1 April to 30 June; the deadline for all customers was 7 August 2026¹.

More than 436,000 sole traders and landlords successfully sent their first quarterly update, and over 570,000 customers had signed up to the service, HMRC said on 12 August 2026². Ahead of the deadline, HMRC had said more than 864,000 sole traders and landlords were in scope¹. Which? reported in July 2026 that HMRC data showed 864,000 individuals and landlords should have registered but fewer than half had done so³.

The update is a short summary of income and expenses for the first three months of the tax year, sent through HMRC-recognised compatible software¹. It is not a tax return: the Self Assessment tax return deadline remains 31 January, and quarterly updates do not replace the return¹. HMRC said those in scope will have to send quarterly updates to be able to submit a tax return².

Craig Ogilvie, HMRC's Director of Making Tax Digital, said:

The thresholds are being lowered in stages. HMRC said MTD for Income Tax will extend to those earning more than £30,000 from April 2027, and to those earning more than £20,000 from April 2028¹. Its guidance sets out which tax year's income determines the start date⁴:

Source: HMRC guidance⁴. Only income from self-employment and property counts towards the threshold; dividends, employment income, pensions, savings interest and capital gains are excluded⁵. Partnerships will also need to use MTD for Income Tax in future, with the timeline to be set out later⁴.

Why it matters for households

Sole traders and landlords with qualifying income above £50,000 have had to keep digital records and file quarterly updates since April 2026, in addition to their annual return¹. Those with qualifying income above £30,000 are drawn in from 6 April 2027, and above £20,000 from 6 April 2028¹. Anyone below the relevant threshold continues to submit Self Assessment returns as normal⁵.

Quarterly updates must go through HMRC-recognised compatible software; HMRC does not provide its own software, and spreadsheets must be linked to HMRC using bridging software to meet the digital link requirement⁵. Government estimates cited by Which? put the transition cost at around £280 to £350 per business in the first year, including a one-off transitional cost and ongoing annual costs of around £110 to £115 for software and administration⁵.

No penalty points were issued for late quarterly updates during the first year of MTD for Income Tax, though penalties still applied for late Self Assessment returns and late payments¹. From 6 April 2027 onwards, points-based penalties apply where taxpayers miss a quarterly deadline: one point per missed deadline, and a £200 fixed penalty once four points are accumulated, with points expiring after a period of compliance¹. Exemptions are available, including for those who are digitally excluded¹.

What happens next

From September 2026, HMRC began signing up customers who should be using MTD for the 2026 to 2027 tax year but had not yet done so, in stages over the coming months². New guidance was to be published in late August explaining what customers need to do if they receive a letter from HMRC about being signed up². The next quarterly deadlines for the 2026 to 2027 tax year are 7 November, 7 February and 7 May⁵.