Making Tax Digital for Income Tax: Your Pre-April 2026 Checklist

What Is Making Tax Digital for Income Tax?

Making Tax Digital for Income Tax (MTD for IT) is HMRC's biggest shake-up to self-assessment in decades. Instead of filing one annual tax return, you now need to submit quarterly updates of your income and expenses digitally, followed by a final end-of-period statement and a tax return declaration. The goal is to make tax reporting more accurate and more frequent.

Who Is Affected Right Now?

From 6 April 2026, MTD for IT is mandatory for self-employed individuals and landlords with total qualifying income over £50,000. If your combined income from self-employment and property rental exceeded this threshold in a previous tax year, you are in scope. Those earning over £30,000 will be brought in from April 2027, with the £20,000 threshold following in April 2028.

What You Must Be Doing Already

If you are in the £50,000-plus group, the April 2026 deadline has passed and your obligations are now live. Here is what compliant taxpayers must be doing:

• Using HMRC-recognised MTD-compatible software such as QuickBooks, Xero, FreeAgent, or Sage to keep digital records of all business income and expenses.
• Submitting quarterly updates to HMRC covering four periods: April to June, July to September, October to December, and January to March.
• Submitting an End of Period Statement (EOPS) at the end of the tax year to confirm your figures are complete and accurate.
• Filing a Final Declaration (replacing the traditional Self Assessment return) to confirm your total income and claim any reliefs.

If You Have Not Signed Up Yet

If you are above the £50,000 threshold and have not yet signed up, you need to act immediately. HMRC began issuing penalties for non-compliance from the start of the 2026-27 tax year. To get started, you must sign up for MTD for IT through your HMRC online account and connect your compatible software. Your software provider will guide you through linking to HMRC's systems via the API.

Choosing the Right Software

Not all accounting software is MTD for IT compatible. HMRC maintains an approved software list on GOV.UK. Key things to look for include:

• Direct submission of quarterly updates to HMRC
• Digital record-keeping for income and expenses
• Support for multiple income sources if you have both self-employment and rental income
• A clear audit trail for HMRC inspection

Many providers offer free or low-cost tiers for sole traders with simple finances. FreeAgent, for example, is free for NatWest and RBS business account holders.

What About Partnerships and Limited Companies?

MTD for IT currently applies only to sole traders and individual landlords. General partnerships and limited companies are not in scope yet, though HMRC has indicated partnerships will be included in future phases. Limited companies already have their own Making Tax Digital for VAT obligations if VAT-registered.

Penalties for Getting It Wrong

HMRC is applying a points-based penalty system for late quarterly submissions. Each missed deadline earns a penalty point, and once you reach a threshold, a financial penalty of £200 is charged. Persistent non-compliance can lead to higher penalties. The message is clear: staying on top of your quarterly deadlines is essential.

Key Dates to Bookmark

• 5 August 2026 – Deadline for Quarter 1 update (April to June 2026)
• 5 November 2026 – Deadline for Quarter 2 update (July to September 2026)
• 5 February 2027 – Deadline for Quarter 3 update (October to December 2026)
• 5 May 2027 – Deadline for Quarter 4 update (January to March 2027)

If you are unsure whether MTD for IT applies to you, check your income figures from the 2024-25 tax year and speak to a qualified accountant. Getting set up correctly now will save you significant stress and potential penalties down the line.