Making Tax Digital for Income Tax is a legal requirement to keep digital business records and send HMRC a short update every three months, rather than relying on one Self Assessment return a year. It replaces how income is reported, not what is owed — Income Tax, Class 4 National Insurance and the rules for calculating profit all stay the same.
It is being introduced in stages rather than all at once, based on your qualifying income — broadly, gross self-employment and property turnover before expenses.
Does this affect you?
| Qualifying income over | Tax year | Mandatory from |
|---|---|---|
| £50,000 | 2024/25 | 6 April 2026 — already in effect |
| £30,000 | 2025/26 | 6 April 2027 |
| £20,000 | 2026/27 | 6 April 2028 |
Qualifying income is your total self-employment and property turnover added together, before expenses, based on the tax return for the relevant year. Employment income taxed under PAYE, dividends, pensions and your share of partnership profit do not count. If you jointly own a property, only your own share of the income counts towards your figure, not the total the property generates. Anyone with qualifying income of £20,000 or less is automatically and permanently exempt, and partnerships and limited companies sit outside these rules entirely for now.
What's involved, in brief
- Digital records: kept throughout the year, not assembled once at year end.
- Four quarterly updates: due 7 August, 7 November, 7 February and 7 May — running totals, not full tax returns, and no tax is calculated at this point.
- One final declaration: due by the usual 31 January deadline, submitted through compatible software once all four updates are in.
- Software required: HMRC does not provide its own free tool for this, unlike Self Assessment — you'll need recognised commercial or bridging software.
- Penalties are points-based: four missed deadlines trigger a £200 fine, with £200 for each one after that — and unlike the 2026 intake, the 2027 wave gets no penalty-free first year for quarterly updates.
How we help
- Check your qualifying income and tell you which year you're affected from, well before any letter from HMRC arrives.
- Help you choose and set up HMRC-recognised software that fits how you already work.
- Build a quarterly routine so updates go in on time, every time, rather than a scramble before each deadline.
- Prepare and submit your quarterly updates and final declaration.
- Work out your true share of any jointly owned property income.
- Deal with HMRC directly on your behalf if anything needs queried or corrected.
Frequently asked questions
I'm only just over the threshold — do I definitely need to join?
Yes, if your qualifying income for the relevant tax year is over the threshold, joining is not optional. There's no de minimis above the threshold itself, though qualifying income of £20,000 or less is automatically and permanently exempt.
What software will I need?
Commercial software recognised by HMRC — either software that keeps your digital records directly, or bridging software that connects a spreadsheet to HMRC's systems. HMRC does not provide its own free tool for this, unlike Self Assessment. If you already use bookkeeping software for VAT or general record-keeping, it's worth checking whether it already supports this.
What happens if I miss a deadline?
Penalties are points-based. Each missed quarterly update or annual filing earns one point, and four points trigger a £200 penalty, with a further £200 for every deadline missed after that. The 2026 intake had a penalty-free first year for quarterly updates, but that concession does not repeat for the 2027 wave.
Does income from a jointly owned property count in full?
No — only your own share of the income counts towards your qualifying income, not the total the property generates.
I haven't had a letter from HMRC — does that mean I'm not affected?
Not necessarily. HMRC reviews Self Assessment returns and writes to anyone it identifies as crossing a threshold, but that letter is a courtesy rather than a condition — responsibility for checking your own position sits with you even if nothing arrives.
Can you handle the quarterly updates for me?
Yes. We can check your qualifying income, help you choose and set up suitable software, and take care of your quarterly updates and final declaration so the deadlines are met without becoming a quarterly admin job for you.
Further reading
Preparing for the April 2027 threshold →
MTD for income tax, confirmed →
Want to know exactly where you stand, or get set up before your deadline arrives?
Talk to us about getting MTD-ready →