Making Tax Digital for the Self-Employed: The Complete 2026-27 Guide
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In short: HMRC's Making Tax Digital for Income Tax has applied since 6 April 2026 to UK sole traders and landlords with qualifying income (gross, before expenses) over £50,000: in 2026-27 they keep digital records, send four quarterly updates and file a final return by 31 January. The threshold falls to £30,000 from 6 April 2027 and £20,000 from 6 April 2028.
Making Tax Digital for Income Tax is no longer coming. It's here, and it's running. Since 6 April 2026, UK sole traders and landlords with qualifying income over £50,000 have been legally required to keep digital records and send HMRC quarterly updates. The first-ever mandatory update fell due on 7 August 2026, and HMRC's own figures show how bumpy the start has been: of roughly 864,000 people mandated, only about 436,000 filed that first update. If you're self-employed in the UK, this guide covers where the rules stand right now, in plain English: thresholds, deadlines, penalties, software, and what to actually do.
Disclaimer: This article provides general information only and does not constitute tax advice. Consult a qualified accountant or tax adviser about your circumstances.
What Making Tax Digital is
Making Tax Digital (MTD) is HMRC's long-running programme to move tax record-keeping and reporting from paper and once-a-year returns to digital records and in-year updates. VAT went first, back in 2019. The Income Tax phase, the one that affects sole traders and landlords, became mandatory for the first wave in April 2026.
The practical change is simple to state: instead of one Self Assessment deadline a year, you keep your business records digitally as you go, and your software sends HMRC a summary update four times a year, with your final tax return still due by 31 January. The philosophy behind it is that year-end reconstruction (the shoebox, the bank-statement archaeology, the January panic) is where most errors and most misery come from.
Who's in scope, and when
MTD for Income Tax is phased in by qualifying income: your combined gross income from self-employment and property, before expenses. That means your turnover, not your profit. The threshold is tested against the tax return you already filed:
| Qualifying income | Assessed from your | MTD mandatory from |
|---|---|---|
| Over £50,000 | 2024-25 return | 6 April 2026 |
| Over £30,000 | 2025-26 return | 6 April 2027 |
| Over £20,000 | 2026-27 return | 6 April 2028 |
Two traps hide in that table. First, gross means gross: £50,000 of turnover with £20,000 of profit is still in scope. Second, income sources combine: £27,000 of freelance work plus £25,000 of rent is £52,000 of qualifying income, so you're mandated even though neither source alone crosses the line. (That's HMRC's own worked example.) HMRC estimates around 2.9 million people will be inside MTD by 2028, and the government has signalled interest in going further down the income scale eventually.
Not sure where you stand? Our free MTD threshold checker gives you the answer in under a minute, and the qualifying income guide covers the edge cases: side hustles, joint property, and the rest.
Exemptions exist for the digitally excluded, where age, disability, location or religion make software genuinely impractical. You apply through Self Assessment general enquiries and HMRC aims to respond within 28 days; see who's out of scope.
The quarterly rhythm: cumulative updates, four deadlines
Every mandated person sends four updates a year. The deadlines are fixed and worth memorising:
| Update covers | Deadline |
|---|---|
| 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 (following the tax year) |
Note what the first column actually says: updates are cumulative. Each one covers the year so far, not just the latest three months. That design is quietly forgiving: if you got something wrong in the summer, the corrected figures simply flow through your November update. There's no mid-year amendment process to fight with.
Three more facts that surprise people:
- HMRC never sees your receipts. A quarterly update contains totals per income and expense category, aligned with the Self Assessment categories, and nothing else. In HMRC's own words, they will not receive "details of individual digital records, such as a receipt or invoice." The receipts stay in your records; only the totals travel.
- Nil updates are mandatory. A quiet quarter with no income or expenses still requires an update.
- A calendar-quarter election exists if your accounting runs 1 April to 31 March. The deadlines stay the same; only the periods shift.
After the fourth update, you finalise the year through your tax return by 31 January, as you always have. The full mechanics are in our quarterly update deadlines guide and what goes in a quarterly update.
Penalties: the points system, and the first-year waiver nobody mentions
MTD brings Income Tax under HMRC's points-based penalty system: one point per missed submission deadline, and at 4 points a £200 penalty, with a further £200 for each miss after that. Points expire after 24 months if you stay below the threshold.
But here's the part the scare-marketing leaves out: HMRC is not applying penalty points for late quarterly updates in the first year (2026-27) for those mandated from April 2026. The waiver buys the first wave breathing room on quarterly submissions. Late tax returns and late payment are still penalised as normal, though: late payment now runs 3% of the tax owed at day 15, another 3% at day 30, then 10% per year charged daily, on top of interest at base plus 4% (currently 7.75%).
So if you're behind on 2026-27 quarterly updates, you're not accruing points yet. The habit that gets you current before April 2027 still matters, because the waiver is a one-year bridge, not a policy. For the full picture, including how points reset, see MTD penalty points explained and what happens if you miss a deadline.
The software question: it's a stack, not one app
"MTD-compatible software" causes more confusion than any other part of this. The clean way to think about it is two jobs:
- Keeping digital records: capturing every income and expense item digitally, categorised, through the year. This is the daily-life part.
- Submitting to HMRC: sending the quarterly category totals and the final declaration through software connected to HMRC's systems. Only HMRC-recognised filing software (or your accountant using it) can do this; there's an official list on gov.uk.
HMRC explicitly supports splitting the jobs: dedicated record-keeping tools feeding filing software or an accountant, connected by digital links. Even a spreadsheet remains legal as the records layer. Most sole traders end up with one of two stacks: records app + accountant (your accountant files from your records) or records app + filing software (you file yourself). We compare the options honestly, including what each type of tool does and doesn't do, in MTD software vs receipt apps and do I need an accountant for MTD.
Where Taxr fits, stated plainly: Taxr looks after your expense records. It is not MTD filing software and does not submit to HMRC. What it does is take most of the work out of keeping those records: photograph any receipt and the AI extracts the vendor, date, total and VAT and suggests a UK tax category for you to confirm. You can then export clean Excel or PDF records for your accountant, or for your own filing software if it can import the Excel file. If your accountant handles your filing, they can also see your records live through the free Taxr accountant portal. Our page on Taxr for UK sole traders sets out what the app does and doesn't do for MTD.
What to do now, by wave
Mandated since April 2026 (over £50k): if you're among the ~428,000 who haven't filed, use the waiver window to get current rather than waiting for it to close. Sign up (you need to be registered for Self Assessment with a return filed in the last two years), pick your stack, and start capturing records digitally today. The cumulative design means your next update can carry the whole year so far. Our first-year record-keeping checklist walks through it.
Joining April 2027 (over £30k): your 2025-26 return decides your fate, and it's likely already filed. Don't spend 2026-27 on paper and then attempt a cold switch in March. Start the digital habit now while the stakes are zero.
Joining April 2028 (over £20k): you have the most runway, and the same lesson applies: records kept digitally this year make everything after painless. See the £20,000 threshold guide.
Landlords: everything above applies to property income too, with a few twists, covered in MTD for landlords.
Make your expense records a non-event
Every part of MTD gets easier if expenses are captured the moment they happen. That's the whole design of Taxr: about 5 seconds with your phone at the point of purchase. The AI reads the receipt and suggests the right UK tax category, and your expense totals build as you go. When 7 November comes, the expense side of the update is arithmetic, not archaeology.
Download Taxr free. Your digital records start with the next receipt someone hands you.