Making Tax Digital for Income Tax: Who Is Caught in 2026 and 2027

Making Tax Digital for Income Tax Self Assessment became mandatory on 6 April 2026 for sole traders and landlords with qualifying income above £50,000, based on 2024-25 figures. From 6 April 2027 the threshold drops to £30,000, based on 2025-26 income. If you are in scope, you need digital records and software that can send HMRC quarterly updates.

Who is caught, and when

HMRC works out whether you are in scope from your tax return two years back. The rule looks at your total qualifying income from self-employment and property together, not each source on its own.

• From 6 April 2026: qualifying income above £50,000 in 2024-25.
• From 6 April 2027: qualifying income above £30,000 in 2025-26.
• A further drop to £20,000 is due from 6 April 2028, based on 2026-27 income, though that phase is further out and worth watching rather than acting on today.

If your income sits near one of these lines, do not wait for HMRC to write to you. Check your last filed return against the threshold that applies to your situation, and plan the move to digital records before the deadline rather than in the weeks before it. Landlords with several rental properties should also check the combined figure carefully, since two smaller lettings can push a total over the line even when neither one looks large on its own.

What "digital records" actually means

MTD does not just mean filing online instead of on paper. Every transaction that makes up your self-employment or property income and expenses has to be recorded digitally, in MTD-compatible software, as it happens rather than reconstructed at year end from a shoebox of receipts.

In practice that means:

• A digital ledger (Xero, QuickBooks Online, FreeAgent, or a spreadsheet paired with bridging software) that holds every transaction, not a summary.
• Bank feeds or regular imports, so records stay current through the year rather than arriving in one batch.
• A clear split between business and personal transactions if you are a sole trader using a personal account, since only the business side belongs in the digital record.
• Digital storage for receipts and invoices that back up what is in the ledger, kept in a form HMRC could ask to see.

Quarterly updates and the final declaration

Once you are in MTD, you send HMRC a quarterly summary of income and expenses for each business and property source, roughly every three months, followed by a final declaration after the tax year ends. The quarterly updates are simpler than a full return: they are a running total from your digital records, not a fresh calculation each time. The paper-based Self Assessment return itself is retired for anyone in MTD; the quarterly updates and final declaration replace it.

This is a change in rhythm as much as format. Books that used to get tidied up once a year, often close to the January deadline, now need to be broadly current every quarter. That is easier if bookkeeping is a monthly habit rather than an annual scramble, which is the shift most sole traders and landlords feel first.

Getting ready before your deadline

The businesses that find MTD painless are the ones that moved their records onto compatible software well before their mandatory date, then used a few quarters to settle into the new rhythm while the stakes were still low. If your bookkeeping is currently behind or still on spreadsheets that are not MTD-compatible, monthly bookkeeping from Finbryn gets your records into a digital, reconciled state with time to spare before your threshold applies.

We keep the ledger reconciled and MTD-ready every month; the quarterly submissions and final declaration are made by you or by the UK agent you appoint, since that step needs a person authorised to act with HMRC on your behalf. See pricing for how monthly bookkeeping is quoted, or get in touch if your mandatory date is coming up and your records need attention first.

FAQ

Does MTD for Income Tax apply to limited companies?

No. This phase covers sole traders and landlords reporting through Self Assessment. Limited companies already file through Corporation Tax and are not brought into this particular scheme by these dates.

What counts towards the £50,000 or £30,000 threshold?

Your combined gross income from self-employment and property, before expenses, in the relevant earlier tax year. It is turnover, not profit, and the two income types are added together rather than tested separately.

Can I still use a spreadsheet?

Yes, if it is linked to MTD-compatible bridging software that can send the quarterly updates directly from the spreadsheet to HMRC. A spreadsheet with no bridging link will not meet the requirement on its own.

What happens if I miss my mandatory start date?

Once your mandatory date has passed, HMRC expects you to be keeping digital records and sending quarterly updates from that point on, alongside the usual late filing and late payment rules that already apply under Self Assessment. Moving early, once your circumstances make MTD clearly likely, avoids a rushed switch under a live deadline.

This article is general information, not personalised tax guidance. For advice specific to your situation, speak to a qualified adviser.