HMRC’s Making Tax Digital (MTD) programme is transforming the way individuals and businesses manage their tax.
From April 2026, the next phase, MTD for Income Tax, will take effect, requiring sole traders and landlords to keep digital records and send quarterly updates to HMRC using approved accounting software.
This marks the biggest change to personal tax reporting in over 30 years, replacing the traditional once‑a‑year Self Assessment return with a more modern, digital approach.
In this guide, we’ll explain what’s changing, who’s affected, key dates to know, and how to prepare for the 2026 rollout.
Key Takeaways
- Start date: April 2026 for individuals earning over £50,000.
- Next phase: April 2027 for those earning over £30,000.
- Quarterly updates: Replace the single annual tax return.
- Payments: Still due by 31 January (and 31 July if applicable).
- Software: You must use HMRC‑recognised accounting software.
What Is Making Tax Digital (MTD)?
Making Tax Digital is part of HMRC’s long‑term goal to modernise the UK’s tax system.
It aims to make tax administration simpler, more accurate, and more efficient by replacing manual record‑keeping and annual submissions with real‑time digital reporting.
MTD was first introduced for VAT‑registered businesses in 2019. The next stage, MTD for Income Tax, extends these digital requirements to sole traders and landlords.
By keeping records digitally and submitting quarterly updates, taxpayers can:
- Reduce the risk of errors,
- Gain a clearer view of their tax position throughout the year, and
- Avoid last‑minute stress at tax return deadlines.
Who Will Be Affected by HMRC Making Tax Digital in 2026?
The new rules will apply in stages based on income levels:
| Start Date | Who It Applies To |
| 6 April 2026 | Sole traders and landlords with income above £50,000 |
| 6 April 2027 | Sole traders and landlords with income above £30,000 |
| Future phases | May extend to lower thresholds later |
Not included (for now):
- Partnerships
- Limited companies
- Individuals earning below £30,000
[Note: HMRC will contact eligible taxpayers directly based on their latest Self Assessment return to confirm when they must join Making Tax Digital.]
How MTD for Income Tax Works
Under the new system, affected taxpayers will manage their income tax digitally through HMRC‑recognised software.
Here’s what that means in practice:
1. Keep Digital Records
You’ll need to record all income and expenses using compatible software such as Xero, QuickBooks, FreeAgent, or Sage.
Manual record‑keeping or spreadsheets alone won’t meet HMRC’s requirements, unless linked via approved bridging software.
2. Submit Quarterly Updates
Every three months, you’ll send a summary of your income and expenses directly to HMRC.
These updates are not tax bills, they’re designed to give you and HMRC a real‑time view of your finances.
| Period | Update Deadline |
| 6 Apr - 5 Jul | 7 Aug |
| 6 Jul - 5 Oct | 7 Nov |
| 6 Oct - 5 Jan | 7 Feb |
| 6 Jan - 5 Apr | 7 May |
3. Final Declaration
At the end of the tax year, you’ll submit a final declaration by 31 January, confirming your total income, adjustments, and reliefs.
This replaces the traditional Self Assessment return but serves the same purpose, finalising your annual tax position.
4. Payment Deadlines Remain the Same
Even though reporting becomes quarterly, payment dates don’t change.
- 31 January: Main payment deadline.
- 31 July: Second payment on account (if applicable).
In short: You’ll send four updates a year, but you’ll still pay your tax once or twice, just like now.
How to Prepare for Making Tax Digital
Getting ready for HMRC Making Tax Digital doesn’t have to be complicated, but it does require some forward planning.
Here’s how to make the transition smooth and stress‑free before the April 2026 rollout.
Step 1: Choose HMRC‑Recognised Accounting Software
To comply with MTD, you’ll need to use approved accounting software that can record income and expenses digitally and send updates directly to HMRC.
Popular options include:
- Xero – user‑friendly with strong automation features.
- QuickBooks – ideal for small businesses and sole traders.
- FreeAgent – great for freelancers and landlords.
- Sage – robust and widely used by established businesses.
When choosing, consider the ease of use and support options, integration with your current bookkeeping system as well as cost and scalability as your business grows.
Tip: If you prefer using spreadsheets, you’ll need bridging software that connects them to HMRC’s digital system.
Step 2: Start Keeping Digital Records Early
Although MTD for Income Tax doesn’t become mandatory until April 2026, it’s wise to start practising now.
Getting into the habit of logging income and expenses digitally will make the transition far easier later on.
Early adoption helps you to understand how your chosen software works and identify any gaps or data‑entry issues.
Step 3: Consider Joining the HMRC Pilot Scheme
HMRC’s MTD for Income Tax pilot programme allows eligible taxpayers to sign up voluntarily before 2026.
This gives you a chance to test your software, send real quarterly updates, and experience the new system in advance.
Note: Not all software providers currently support the pilot, so check with your accountant or software vendor before registering.
Step 4: Work with a Qualified Accountant
MTD introduces new reporting requirements and having professional guidance can make a big difference.
An accountant can help you:
- Choose and set up compatible software.
- Ensure your records meet HMRC’s digital standards.
- Manage quarterly submissions accurately.
- Avoid penalties for late or incorrect updates.
Expert insight:
“Starting early with the right support ensures you’re confident and compliant well before the 2026 deadline.”
Benefits of Making Tax Digital
While MTD introduces new processes, it also brings clear advantages for taxpayers who embrace it early.
Greater Accuracy
Digital record‑keeping reduces manual errors and ensures HMRC receives accurate figures every quarter.
2. Real‑Time Tax Visibility
You’ll be able to see an estimate of your tax bill after each quarterly update, helping you plan ahead and avoid surprises.
3. Easier Financial Management
Automation features, such as receipt scanning and bank feeds, save time and make bookkeeping more efficient.
4. Better Decision‑Making
Regular updates give you clearer insight into your cash flow and business performance throughout the year.
5. Less January Stress
By keeping records up to date, you’ll avoid the usual year‑end rush that comes with Self Assessment deadlines
How Ryans Chartered Accountants Can Help
At Ryans Chartered Accountants, we specialise in helping individuals, landlords, and small businesses prepare for Making Tax Digital.
Our team provides expert guidance at every stage, from choosing the right software to managing quarterly submissions and ensuring full compliance with HMRC’s digital requirements.
Our MTD Services Include:
- Setting up and integrating MTD‑compatible accounting software.
- Training and support for digital record‑keeping.
- Managing quarterly updates and final declarations.
- Liaising with HMRC on your behalf.
- Ongoing bookkeeping and tax planning advice.
If you’d like to get ahead of the 2026 deadline, we can also help you join HMRC’s pilot scheme and start testing the system early.
Contact Ryans Chartered Accountants today to start preparing for HMRC Making Tax Digital 2026 and make the switch to digital tax reporting with confidence.
FAQ's
When does Making Tax Digital for Income Tax start?
MTD for Income Tax begins on 6 April 2026 for sole traders and landlords with annual income above £50,000.
Those earning between £30,000 and £50,000 will join from April 2027, with further phases expected later.
Contact UsWho has to use Making Tax Digital from 2026?
From 2026, sole traders and landlords whose total business or property income exceeds £50,000 will need to keep digital records and submit quarterly updates to HMRC using recognised software.
Contact UsDo landlords have to follow Making Tax Digital rules?
Yes. Landlords with property income above the threshold must comply with MTD rules from the relevant start date. Each property business must be recorded separately within the software.
Contact UsWill I have to pay tax four times a year?
No. Although you’ll submit information quarterly, payment deadlines remain the same:
31 January – main payment deadline
31 July – second payment on account (if applicable)
Quarterly updates are purely for reporting, not for paying tax.
Contact UsCan I still use spreadsheets for MTD?
Not on their own. Spreadsheets can only be used if connected to HMRC‑compatible bridging software that submits data digitally.
Manual entry or unlinked spreadsheets won’t meet compliance requirements.
Contact UsWhat happens if I don’t comply with MTD?
Once MTD becomes mandatory, failing to keep digital records or submit quarterly updates could result in penalties or late‑submission fines.
HMRC will expect all eligible individuals to follow the new digital process.
Contact UsWhat are the benefits of Making Tax Digital?
MTD improves accuracy, reduces HMRC processing errors, and gives taxpayers real‑time insight into their finances.
It also helps spread admin throughout the year, avoiding the last‑minute rush of Self Assessment season.
Contact UsHow can an accountant help with MTD compliance?
A qualified accountant can:
Recommend and set up compliant software.
Manage quarterly submissions.
Ensure your records meet HMRC standards.
Liaise directly with HMRC on your behalf.
Contact Us