Making Tax Digital for Income Tax
Understand who needs to use Making Tax Digital for Income Tax, when the staged requirements begin, what qualifying income means, how digital records work, quarterly updates, software and the final tax-return process.
Making Tax Digital
Making Tax Digital for Income Tax: Complete UK Guide
Understand who needs to use Making Tax Digital for Income Tax, when the staged requirements begin, what qualifying income means, how digital records work, quarterly updates, software and the final tax-return process.
Who is affected?
ADVERTISE HEREPromote your business to Accounting Hire visitors.Ask about advertising opportunities →The rules apply to individuals who are registered for Self Assessment and have qualifying income from self-employment, property, or both, above the relevant threshold. Qualifying income is based on gross income before expenses rather than taxable profit.
| Relevant tax return | Qualifying income | MTD start date |
|---|---|---|
| 2024/25 | More than £50,000 | 6 April 2026 |
| 2025/26 | More than £30,000 | 6 April 2027 |
| 2026/27 | More than £20,000 | 6 April 2028 |
What qualifying income means
For this purpose, qualifying income is the total gross income from relevant self-employment and property sources before expenses. This is why a business owner should not compare the threshold with their net profit figure without checking the rules.
Step 1: Check whether you need MTD
Start with the correct tax return and qualifying-income figure. Then check whether an exemption applies. HMRC provides an online process and detailed guidance for determining the start date.
Step 2: Choose compatible software
HMRC does not provide the accounting software itself. You need software that supports MTD for Income Tax. Check the provider’s current compatibility and whether it covers the features your business needs, including multiple income sources, expenses and accountant access.
Step 3: Sign up
HMRC says you must be registered for Self Assessment and have submitted a tax return in the last two years to sign up. HMRC can also begin signing up people it identifies as needing to use the service.
Step 4: Keep digital records
Relevant business income and expenses need to be recorded digitally in compatible software. Your supporting evidence, such as invoices and bank statements, remains important. Digital record keeping should become part of the normal bookkeeping process rather than a quarterly emergency exercise.
Step 5: Send quarterly updates
Quarterly updates provide HMRC with information from your digital records during the year. They are not the same as four separate final tax returns. You still complete the end-of-year tax-return process and make any required adjustments, claims and declarations.
Example first-year timetable
| Task | Example timing for standard update periods |
|---|---|
| Digital records begin | From 6 April 2026 |
| First quarterly update | By 7 August 2026 |
| Second quarterly update | By 7 November 2026 |
| Third quarterly update | By 7 February 2027 |
| Fourth quarterly update | By 7 May 2027 |
| Final tax return and payment | Check the applicable Self Assessment deadline; HMRC’s example for the 2026/27 cycle gives 31 January 2028. |
HMRC notes that accounting periods can affect the dates used for quarterly updates, so do not copy a generic timetable without checking your own accounting period.
MTD and your accountant
An accountant can help with software selection, authorisation, bookkeeping processes, quarterly review and year-end adjustments. When comparing accountants, ask whether MTD support is included in the regular fee or charged separately.
Common mistakes to avoid
- Comparing the MTD threshold with net profit rather than qualifying income.
- Leaving digital bookkeeping until the quarterly deadline.
- Choosing software without checking MTD compatibility.
- Assuming quarterly updates replace the final tax return.
- Ignoring the effect of multiple income sources.
- Failing to keep supporting records.
Official HMRC guidance
Use Making Tax Digital for Income Tax · HMRC step-by-step guide.