Does it apply to you?
HMRC looks at your qualifying income on your tax return. That's your turnover from self-employment plus any rent you receive, before you take off expenses. It isn't your profit.
If it was over £50,000 on your 2024/25 return, you've been in MTD since 6 April 2026. If it's over £30,000 on your 2025/26 return, which is due by 31 January 2027, you join on 6 April 2027. The limit drops to £20,000 for April 2028. HMRC writes to you before you need to start.
Partnerships don't use MTD yet. If you're a director of your own limited company, it doesn't apply to the company's income.
What counts towards the limit
This is where trades get caught out. Turnover is everything you invoice, including materials you buy and pass on to the customer. A job billed at £650 is £650 of turnover even if £180 of it was parts.
At £200 a day you pass £30,000 after 150 days' work, before you count materials. Plenty of sole traders who think of themselves as small are over the line for April 2027.
If you own a rental property jointly, only your share of the rent counts.
What you send each quarter
A quarterly update is a summary of your income and expenses for the tax year so far, sent from software that works with MTD. It isn't a tax return and there's no tax to pay with it. Your software adds up your records; you check the totals and send them.
You have to send an update even in a quarter with no work. Each one covers the year to date, so a mistake in one quarter is put right in the next.
Deadlines
| Update | Covers | Due |
|---|---|---|
| Quarter 1 | 6 April to 5 July | 7 August |
| Quarter 2 | 6 April to 5 October | 7 November |
| Quarter 3 | 6 April to 5 January | 7 February |
| Quarter 4 | The full year to 5 April | 7 May |
| Final declaration | The whole tax year | 31 January after the year ends |
If your accounts run from 1 April to 31 March, you can choose calendar quarters instead. The deadlines are the same.
Penalties
MTD brings a points system for late submissions. You get a point for each missed deadline, and at 4 points a £200 penalty, then another £200 each time you miss a deadline after that.
For the 2026/27 tax year, HMRC isn't giving points for late quarterly updates. You still have to send them before you can file. Late tax returns and late payments are penalised as before.
Joining in April 2027? There's no let-off year for you. Points apply from your first quarterly update, due 7 August 2027.
If you work under CIS
Your turnover is the gross amount on your CIS payment and deduction statements, before the 20% comes off. Someone paid £24,000 after deductions was paid £30,000 gross, which is over the April 2027 limit.
The deductions still come off your tax bill at the end of the year. Record each monthly statement in your software as you go.
Choosing software
You need software on HMRC's list of products that work with MTD for Income Tax. Some job apps send the updates themselves; others connect to accounting software that does. If you already use Xero, QuickBooks or Sage, check your plan covers MTD for Income Tax and not only VAT.
If you'd rather not deal with it, an accountant can send the updates for you.
Common questions
Do I need an accountant for MTD?
No. You can send the updates yourself from compatible software. Many people who already use an accountant ask them to send the updates as well.
Can I keep using a spreadsheet?
Yes, if you link it to HMRC with bridging software. The spreadsheet holds your records and the bridging software sends the totals.
I'm employed and do some private work. Does my wage count?
No. Only turnover from self-employment and property counts towards the limit. Wages taxed through PAYE don't.
Sources
- Find out if and when you need to use Making Tax Digital for Income Tax, GOV.UK. Checked 2 Nov 2026
- Send quarterly updates, GOV.UK. Checked 2 Nov 2026
- Penalties for Making Tax Digital for Income Tax, GOV.UK. Checked 2 Nov 2026
- Find out if you can get an exemption from Making Tax Digital for Income Tax, GOV.UK. Checked 2 Nov 2026
- What you must do as a CIS subcontractor, GOV.UK. Checked 2 Nov 2026
Spotted something out of date? Email figures@toolboxmoney.co.uk and we'll check it within two working days.