Self-Employed & MTD
MTD Is Live: What Sole Traders and Landlords Need to Do Now
If your 2024/25 tax return showed more than £50,000 of combined gross self-employment and property income, you generally entered MTD for Income Tax from 6 April 2026. The first update was due 7 August. HMRC is not issuing quarterly penalty points in 2026/27, but digital records and quarterly updates are still required before the annual MTD tax return can be submitted.
It is August 2026. Who is already inside MTD?
The first mandatory group started from 6 April 2026: sole traders and landlords whose qualifying income on the 2024/25 tax return was more than £50,000.
Qualifying income means gross income from self-employment and property before expenses. HMRC combines multiple self-employments and property income sources for this test. PAYE employment, dividends, pensions and an individual partner’s share of partnership profit do not count towards this qualifying-income figure.
Example: landlord plus sole trader
Priya’s 2024/25 return
The expenses do not reduce the £56,000 threshold test. On these simple facts, Priya would be in the first mandatory cohort from April 2026.
The first quarterly deadline has already passed
For most first-cohort taxpayers, the first quarterly update deadline was 7 August 2026. The next deadlines are 7 November 2026, 7 February 2027 and 7 May 2027.
For 2026/27, HMRC will not issue penalty points for late quarterly updates. That does not mean the update can be ignored. Digital records still need to be kept and the quarterly updates must be sent before the MTD tax return can be submitted.
What does a quarterly update contain?
Compatible software takes the digital records and sends summary totals of self-employment or property income and expense categories. HMRC says no accounting or tax adjustments are required before the quarterly update. The final tax return remains the point where the year is completed, adjustments/reliefs are dealt with and other income or gains are included.
One important 2026 change: updates are cumulative
HMRC’s current guidance says each quarterly update covers from the start of the tax year to the end of that update period, rather than only the latest three months. That means corrections made to digital records can flow into a later cumulative update.
If you missed 7 August
There is no quarterly penalty point in the first MTD year, but the underlying digital-record obligation has not disappeared. Bring the April-to-July records up to date, connect the compatible software properly and send the required update.
What people commonly get wrong
The test uses gross qualifying income before expenses.
Property income can combine with the trade and push the total over the threshold.
The quarterly update is a summary from digital records; the annual MTD tax return still remains.
No quarterly penalty points does not remove the digital records and update requirements.
MTD is mainly a bookkeeping-system problem before it is a tax-return problem. If the records are already kept properly in compatible software, the quarterly update should be the end of the process rather than a quarterly panic.
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Official sources
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.
Last reviewed: 16 August 2026