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Making Tax Digital for Income Tax

MTD is already here. Find out when it applies to you.

SV&Co helps sole traders and landlords across Southall, Ealing, Hayes, Wembley and wider West London check their MTD position, choose suitable software, keep digital records and manage quarterly updates and the annual tax return.

The first MTD quarterly deadline has already passed.For the first cohort, the first update was due on 7 August 2026. HMRC says there are no penalty points for late quarterly updates for 2026/27, but the updates still need to be sent before the MTD tax return can be submitted.

Check if MTD applies WhatsApp SV&Co

Start with your question

What do you need to know about MTD?

Use the checker first if you are unsure. Then read only the part that matters to you.

MTD can create recurring adminThe goal is to make the bookkeeping process easier, not simply add four deadlines.

Does MTD apply to me?

Use the interactive checker using your self-employment and property income.

Start the checker

What counts as qualifying income?

Understand gross income, combined sources and what HMRC excludes.

Understand the threshold

What are the quarterly deadlines?

See the four update dates and what happens after the year end.

See the dates

What software do I need?

Choose compatible software that suits the business rather than paying for features you will not use.

Review software

I missed 7 August. What now?

Understand the first-year penalty easement and what still needs doing.

See next steps

Free MTD Checker

When are you likely to enter Making Tax Digital?

Use gross self-employment and property income before expenses. The checker deliberately asks about the tax year because HMRC uses an earlier tax return to determine the MTD start date.

Official basis: GOV.UK / HMRCLast checked: 16 August 2026Live site uses SV&Co Official Data Hub

Your MTD position

Which description fits you best? Which tax return are you checking? Gross self-employment income before expenses Gross property income before expenses Did the relevant income source cover less than a full tax year? Have all your personal self-employment and property income sources now ceased? What is your exemption position? Did HMRC send you an MTD letter? Are you already using MTD for Income Tax compatible software?

Qualifying income

Add your self-employment and property income before expenses.

HMRC normally uses the Self Assessment return submitted for an earlier tax year to work out whether the MTD threshold is exceeded.

Normally included

Gross sole-trader or self-employment income.
Your personal property income.
Income from more than one personal self-employment source.
Your share of jointly owned property income.
UK and foreign property income if relevant under HMRC's residence rules.

Example£27,000 self-employment income plus £25,000 rental income gives £52,000 qualifying income before expenses.

Normally not included in the qualifying-income threshold

Employment income taxed through PAYE.
Your share of partnership profit as an individual partner.
Dividends, including dividends from your own company.
State Pension or private pension income.
Transition profits from basis period reform.

But they can still matter laterOther taxable income may still need to be reported through the annual tax return even though it does not count towards the MTD qualifying-income threshold.

First-year or short-period income needs care.

HMRC can annualise qualifying income where a sole-trader accounting period is shorter or longer than 12 months. Property income may also need annualising. That is why the checker flags partial-year cases for review.

How MTD works

Four quarterly updates do not replace the annual tax return.

The system spreads record keeping through the year, but there is still an annual tax-return stage.

Keep digital recordsRecord the relevant self-employment and property income and expenses in compatible software.

Send quarterly updatesThe software totals the digital records and sends income and expense information to HMRC.

Review the yearAfter year end, make the necessary accounting and tax adjustments and add other reportable income.

Submit the tax returnComplete and submit the annual tax return from MTD-compatible software by 31 January.

A quarterly update is not a quarterly tax return.HMRC says accounting and tax adjustments do not need to be made before a quarterly update is sent. The figures build an estimated tax position during the year.

Quarterly deadlines

The four deadlines stay the same each year.

Most customers can use standard tax-year update periods, or choose calendar update periods. The submission deadlines are the same.

7 AugustFirst quarterly update deadline.

7 NovemberSecond quarterly update deadline.

7 FebruaryThird quarterly update deadline.

7 MayFourth quarterly update deadline, after the tax year ends.

Standard update periods

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.

Calendar update periods

1 April to 30 June → 7 August.
1 April to 30 September → 7 November.
1 April to 31 December → 7 February.
1 April to 31 March → 7 May.

HMRC says you cannot change the update-period method for a tax year after you have sent a quarterly update.

Missed the first deadline?

Do not ignore MTD because 7 August has passed.

The first update for the 2026/27 cohort was due on 7 August 2026.

The helpful part

HMRC currently says there are no penalty points for missing quarterly update deadlines during the 2026 to 2027 tax year.

This is a first-year easement for quarterly updates. It does not mean the MTD requirements have disappeared.

What you still need to do

Get signed up if you are required to use MTD.
Start or complete the required digital records.
Use compatible software.
Send the quarterly updates that are still outstanding.
Continue with later quarterly deadlines.
Submit the MTD tax return after year end.

The annual return and payment deadlines still matter.

HMRC says penalties can still apply to late tax returns and late payment. For tax years after 2026/27, the quarterly-update penalty system is points based. The current threshold is 4 points and the penalty is £200 once that threshold is reached, with further penalties for later missed deadlines.

Software and bookkeeping

The right MTD software should reduce admin rather than simply create another subscription.

HMRC does not provide its own MTD bookkeeping software. You need compatible commercial software or a compatible bridging solution.

Choose around the way you work

Bank feeds and transaction volume.
Invoice and receipt capture.
Rental property versus trading business.
More than one income source.
VAT or payroll alongside MTD.
Whether you want your accountant to manage most of the process.

The best system is not automatically the most expensive package. It is the one that fits the records and is actually used properly.

What MTD software needs to support

Create and maintain digital self-employment and property records.
Send quarterly updates.
Complete and submit the annual tax return.
Link or bridge appropriately where spreadsheets or other software are retained.

HMRC software finder Bookkeeping & Cloud Accounting

Exemptions

Some people are automatically exempt. Others need to apply.

Exemptions have detailed rules, so the checker deliberately sends unusual cases for review rather than pretending every case is simple.

Digital exclusion

You may be able to apply where it is not reasonable for you to use compatible software because of circumstances such as age, disability, religious beliefs or inability to obtain suitable internet access.

Automatic exemptions

HMRC lists certain automatic exemptions, including some cases involving no National Insurance number, personal representatives, specific return pages or claims and other defined circumstances.

Not enough on its own

HMRC says simply being unfamiliar with accounting software, having few records, previously filing on paper, or facing extra time or cost is not by itself enough for a digital-exclusion exemption.

HMRC exemption guidance

Who SV&Co can help

MTD is an accounting workflow issue as much as a tax-filing issue.

Sole traders already over £50,000

Check the 2024/25 qualifying income, get signed up, bring digital records up to date and catch up any missed quarterly update.

Landlords with property income

Combine relevant property income with any personal self-employment income, choose suitable software and organise property records digitally.

Clients approaching £30,000

Use the 2025/26 return to see whether MTD starts from April 2027 and put the bookkeeping system in place before the deadline arrives.

More than one business or property source

Make sure all relevant income sources are identified and set up in compatible software.

Spreadsheet users

Review whether bridging software is sensible or whether a fuller bookkeeping package will save more time over the year.

Clients who received no HMRC letter

Check the actual qualifying-income rules. HMRC says the responsibility to check remains with the taxpayer even if a letter did not arrive.

MTD FAQs

Questions clients are asking now.

I did not receive an HMRC letter. Does that mean MTD does not apply?

No. HMRC says you should still check your qualifying income yourself. If it is above the relevant threshold, not receiving a letter does not remove the requirement.

Is the £50,000 threshold based on profit?

No. Qualifying income is broadly gross income before expenses from self-employment and property, based on the relevant earlier tax return.

If I have £35,000 self-employment income and £20,000 rent, do they combine?

Normally yes. Personal self-employment and property income can be combined for the qualifying-income test, so those figures would total £55,000 before expenses.

Does my PAYE salary count towards the MTD threshold?

No. Employment income does not count towards qualifying income for the MTD threshold.

Does my partnership share count?

HMRC says a share of partnership profit as an individual partner does not count towards qualifying income. Partnerships themselves are expected to enter MTD later, but the timetable has not yet been set.

I missed 7 August 2026. Will I get a quarterly penalty?

HMRC currently says there are no penalty points for late quarterly updates in 2026/27. You still need to keep digital records and send the required updates before submitting the annual MTD tax return.

Do quarterly updates replace Self Assessment?

No. You still have an annual tax-return stage. For tax years after you start MTD, the tax return is completed and submitted through MTD-compatible software.

Reviewed by

Sandip Vadher, PhD FCCA

Founder of SV&Co Accountancy. Fellow Chartered Certified Accountant with more than 20 years of finance and accountancy experience.

MTD setup and quarterly support

If MTD applies, make the bookkeeping system do most of the work.

SV&Co can review your qualifying income, help with sign-up, recommend appropriate software, organise digital records and manage the quarterly and annual reporting process.

WhatsApp about MTD Call 07957 946562

Useful information to send us

Your 2024/25 and 2025/26 self-employment/property gross income, whether you received an HMRC MTD letter, current bookkeeping software and whether the 2026/27 digital records are up to date.

Ask SV&Co to check my MTD position

This draft was reviewed against current HMRC guidance on qualifying income, MTD start thresholds, quarterly updates, penalties, exemptions, compatible software and annual tax returns. Changing figures on the live WordPress site will be read from the SV&Co Official Data Hub.