- Making Tax Digital for Income Tax means keeping digital records and sending HMRC a summary every quarter, then a final declaration after the tax year.
- It applies if your self-employment and property income adds up to more than the threshold before expenses.
- £50,000+ from April 2026, £30,000+ from April 2027, £20,000+ from April 2028.
- Limited companies aren’t affected.
What is Making Tax Digital?
Making Tax Digital (MTD) is HMRC’s move away from one paper-style tax return a year. Under MTD for Income Tax, you keep your business records in software that works with HMRC, and send a short summary of your income and expenses every three months.
The quarterly updates aren’t tax returns and you don’t pay tax each quarter. They’re a running total. You still finalise everything once a year in a final declaration, which replaces the Self Assessment return for your business income.
Does it apply to you?
It depends on your qualifying income: everything you earn from self-employment and property, added together, before you take off expenses. That’s turnover, not profit — which catches a lot of tradespeople out, because materials-heavy trades can turn over a lot while making far less.
| Qualifying income | Based on tax year | MTD starts |
|---|---|---|
| Over £50,000 | 2024/25 | 6 April 2026 |
| Over £30,000 | 2025/26 | 6 April 2027 |
| Over £20,000 | 2026/27 | 6 April 2028 |
Example. A plumber invoices £58,000 in 2024/25 and spends £21,000 on materials and van costs. Their profit is £37,000, but their qualifying income is £58,000 — so MTD applies to them from 6 April 2026.
Run a limited company? MTD for Income Tax doesn’t apply to the company. It’s for sole traders and landlords. Partnerships aren’t included yet.
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Key dates for 2026/27
If you joined in April 2026, these are your deadlines for the first full year:
What you need to do
- Work out your qualifying income. Add up your trade turnover and any rental income for the relevant tax year, before expenses.
- Pick MTD-compatible software. HMRC keeps a list. Most tradespeople use bookkeeping software like Xero or QuickBooks, often set up by their accountant.
- Keep records digitally as you go. Every sale and every expense, recorded in the software — not typed up from a shoebox at the end of the year.
- Send your quarterly updates. Your software (or accountant) sends the summary to HMRC by the 7th of the month after each quarter.
- Submit your final declaration by 31 January after the tax year, with any adjustments and claims.
Penalties
Late submissions use a points system. Each missed deadline earns a point, and at four points you get a £200 fine. Points expire if you stay on top of things for long enough.
If you joined in April 2026, HMRC won’t give penalty points for late quarterly updates in your first year — but you still need to send them before your final declaration. That easement doesn’t apply to people joining in 2027 or 2028.
How Mortar helps
Mortar isn’t tax software, and it doesn’t file with HMRC. What it does is make sure the records your accountant and your MTD software need are already there, without the end-of-quarter scramble.
Questions
Do I have to pay tax every quarter now?
No. Quarterly updates are summaries, not payments. Payment dates stay the same as Self Assessment.
Can my accountant do it for me?
Yes. Many accountants send quarterly updates on their clients’ behalf. You just need your records kept digitally.
I’m VAT registered. Is this the same thing?
No. MTD for VAT has applied to VAT-registered businesses since 2022. MTD for Income Tax is separate, though the same software usually handles both.
I earn under £20,000. Do I need to do anything?
Not yet. You can join voluntarily, and keeping digital records now makes life easier if your income grows.
This guide is general information, not tax advice. Rules can change, so check GOV.UK or speak to your accountant about your situation.