Before you use this guide

Making Tax Digital for Income Tax explained, an overview of your first year and a checklist before you use this guide.

About Making Tax Digital for Income Tax

Making Tax Digital for Income Tax is a new way for sole traders and landlords to do Self Assessment.

You only need to use Making Tax Digital for Income Tax if you:

• are already registered for Self Assessment and have submitted a tax return
• get income from self-employment as a sole trader or property as a landlord, or both When you may need to use Making Tax Digital for Income Tax depends on your qualifying income.

Qualifying income is your turnover from self‑employment and property income. This is the total amount before expenses, based on the tax return you submitted in the previous tax year.

If your 2024 to 2025 tax return showed your qualifying income was over £50,000, you need to use Making Tax Digital for Income Tax from April 2026.

Making Tax Digital for Income Tax is being introduced in stages. The following table explains when you’ll need to start using it.

When to start using Making Tax Digital for Income Tax

| Self Assessment tax return | Qualifying income | Start date |
| --- | --- | --- |
| 2024 to 2025 tax year | more than £50,000 | 6 April 2026 |
| 2025 to 2026 tax year | more than £30,000 | 6 April 2027 |
| 2026 to 2027 tax year | more than £20,000 | 6 April 2028 |

A checklist before you use this guide

Before you use this guide, make sure you’ve followed the steps to sign up for Making Tax Digital for Income Tax.

Steps to complete before you use this guide

1. Check if you need to use Making Tax Digital for Income Tax (this includes working out your qualifying income and checking if you are exempt).
2. Get compatible software — you can use our tool to check software you already use or find new software.
3. Sign up for Making Tax Digital for Income Tax. If you’re an agent, make sure you have also:

• created an agent services account

• added your client authorisations for Making Tax Digital for Income Tax
  If you have not completed these steps, it’s important to read the step by step that applies to you:

• sole traders and landlords step by step

• agents step by step

How Making Tax Digital for Income Tax works within Self Assessment

What’s staying the same

Some things in Making Tax Digital for Income Tax are the same as you’re used to in Self Assessment.

You still:

• submit one tax return every tax year
• pay your tax bill as you do now You must still do both by 31 January following the end of the tax year.

What’s new

You need to do new things for Making Tax Digital for Income Tax, such as:

• use compatible software
• create digital records of your self-employment and property income
• send quarterly updates every 3 months
• add any other income sources you have and then submit your tax return using your software
• understand changes to penalties This guide explains how to do these things and what you need to know.

Understanding what you need to do

Some of the terms used to describe what you need to do for Making Tax Digital for Income Tax may be new to you. This section explains what they mean and key information.

Use compatible software

HMRC does not provide software, but there is information about the different types of software and how to choose the right software for Making Tax Digital for Income Tax. You can also use our software finder tool — all software listed on the tool has been through HMRC’s recognition process.

You can choose an all-in-one software product to create digital records, send your quarterly updates and submit your tax return, or you can choose more than one product.

For example, if you use spreadsheets for your records, you can continue to use them. But you’ll still need software that links to your spreadsheets (sometimes called bridging software). This is how you’ll send quarterly updates and submit your tax return.

Your software will have do everything you need — this also means being able to add any other income sources you have before you submit your tax return.

Using software means you’ll be able to store and transfer your records securely.

Create digital records

A digital record is a record of your income or expense that’s created and stored using software compatible with Making Tax Digital for Income Tax.

You only need to create digital records for your self-employment and property income.

When you create a record, you’ll need the:

• amount
• date income was received or expenses occurred
• category of your income or expense (using the same categories as you would for Self Assessment) Keeping digital records using software lets you view your up-to-date cash flow to help support your business.

It also helps you to identify any mistakes early.

Send quarterly updates

Quarterly updates are totals of your self-employment and property income and expenses. They are summaries, not tax returns.

Your software uses your digital records to create the quarterly updates.

You need to send quarterly updates every 3 months during the tax year for each sole trader business and property business you have.

When you send quarterly updates, you’ll be able to see your predicted tax bill. This can help you to:

• make more informed decisions for your business
• get your tax right

Submit your tax return

Your software will show your self-employment and property income and expenses for the whole tax year, for each business that you have.

Once you check this, you may find you need to amend or update some of the information.

If HMRC already has information about your other sources of income and gains, we will add this to your tax return. You’ll need to check them and add any other income sources you have, such as savings or dividends.

You also need to use your software to record any reliefs or allowances, such as capital allowances or Rent-a-Room relief.

You’ll then submit your tax return using your software.

Avoid penalties

New penalties replace the current late filing and late payment penalties.

If you’re late sending a quarterly update or submitting your tax return, you will not get a penalty straight away. Instead, you’ll get a penalty point. If you reach the point threshold, you’ll get a penalty. This means you’ll avoid a penalty if you make a one-off mistake.

We will not apply penalty points for late quarterly updates for the 2026 to 2027 tax year. You still need to send your quarterly updates before you can submit your tax return.

If you’re late paying your tax bill, you’ll get a late payment penalty. The new late payment penalties are more proportionate to how long it takes you to pay what you owe. The sooner you pay, the lower the penalty.

Your first tax year using Making Tax Digital for Income Tax

When you need to start creating digital records for your quarterly updates depends on your accounting period.

If your accounting period ends on 5 April — you’ll use standard update periods and need to create digital records from 6 April.

If your accounting period ends on 31 March — you’ll use calendar update periods and need to keep digital records from 1 April.

There is information about checking your accounting period in your software in the next section — Get your software ready.

There is also information about the dates each quarterly update covers based on your accounting period in Send quarterly updates.

This table explains what you need to do and when you need to do it by for Making Tax Digital for Income Tax starting from April 2026.

| What you need to do | Date |
| --- | --- |
| Create digital records using your compatible software | From 6 April 2026 (if you use standard update periods)

From 1 April 2026 (if you use calendar update periods) |
| Send first quarterly update using your compatible software | By 7 August 2026 |
| Send second quarterly update | By 7 November 2026 |
| Send third quarterly update | By 7 February 2027 |
| Send fourth quarterly update | By 7 May 2027 |
| Prepare and submit your tax return using your compatible software — check if you need to make any adjustments, claim reliefs or allowances, check and add other income or gains, and pay your tax bill | By 31 January 2028 |

What to do next

Before you start using Making Tax Digital for Income Tax you’ll need to get your software ready.

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