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MTD 2026

Making Tax Digital (MTD) Self-Assessment Guide 2026

Practical 2026 guide to HMRC Making Tax Digital for Income Tax: £50,000, £30,000 and £20,000 qualifying-income rollout, digital records, quarterly updates, final tax-return declaration, software requirements, exemptions and penalties.

What MTD for Income Tax Changes From 6 April 2026

Making Tax Digital for Income Tax (MTD ITSA) is HMRC's digital reporting system for individuals already within Self Assessment who receive income from sole-trader self-employment, property, or both and meet the qualifying-income threshold. It introduces digital record keeping and quarterly updates, followed by completion of the annual tax position and final declaration.

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Mandatory rollout begins on 6 April 2026 for qualifying income over £50,000 based on the 2024-25 tax return.
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The threshold falls to over £30,000 from 6 April 2027 based on 2025-26 qualifying income.
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The threshold falls again to over £20,000 from 6 April 2028 based on 2026-27 qualifying income.
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MTD applies to sole traders and landlords, not all forms of Self Assessment income.
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A taxpayer must keep digital records and send quarterly updates through compatible software when mandated.
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The annual tax return remains part of the process; quarterly updates do not simply replace the annual return.

Qualifying Income: The Threshold Is Gross Income Before Expenses

For MTD ITSA threshold purposes, qualifying income is the total turnover from self-employment and property income before expenses, based on the relevant previous tax return used to determine the person's start date. It is not the taxable profit after expenses.

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Qualifying income is gross turnover before expenses and tax.
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Self-employment and property income are combined for the threshold.
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A share of profit from a partnership does not count toward qualifying income.
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Employment income does not count as qualifying income for the MTD threshold.
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Income from a limited company is not itself MTD ITSA qualifying income.
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The threshold is based on the relevant previous tax return when determining mandatory entry.
Tax Return UsedQualifying IncomeMTD Start Date
2024-25More than £50,0006 April 2026
2025-26More than £30,0006 April 2027
2026-27More than £20,0006 April 2028

MTD ITSA Rollout Timeline Through 2028

The MTD ITSA rollout is now defined through 6 April 2028 rather than leaving the sub-£30,000 stage 'under review'. HMRC's published guidance sets the threshold at £50,000, then £30,000, then £20,000.

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The £20,000 threshold is confirmed for 6 April 2028.
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Partnerships are not currently part of the mandatory rollout timetable.
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Taxpayers at or below the relevant threshold are not automatically mandated by that threshold alone.
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Separate exemptions can remove a taxpayer from MTD even where the threshold is met.
Start DateQualifying Income TestWho Enters Mandatory MTD
6 April 2026More than £50,000 in 2024-25Eligible sole traders and landlords
6 April 2027More than £30,000 in 2025-26Eligible sole traders and landlords
6 April 2028More than £20,000 in 2026-27Eligible sole traders and landlords

Digital Records and Compatible Software

Mandated taxpayers must keep the required self-employment and property records digitally using MTD-compatible software. The software must support the relevant HMRC MTD functions, including keeping digital records, sending quarterly updates and completing the tax-return/finalisation process. Spreadsheets can form part of the process where they are connected through appropriate bridging software that satisfies the digital-link requirements.

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Digital records are mandatory for people within MTD unless exempt.
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Compatible software must be capable of communicating with HMRC.
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Examples of commercial software providers can change; users should check the current HMRC-compatible software list.
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A spreadsheet alone is not necessarily sufficient for the complete MTD filing process.
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Bridging software can connect certain spreadsheet workflows to HMRC.

Quarterly Updates: What You Actually Submit

MTD taxpayers send four quarterly updates summarising their digital records for the relevant income sources. These are updates of income and expenses, not four separate tax returns. The quarterly updates build a year-to-date picture of the business/property activity.

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The deadline is the 7th, not the 5th.
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The first 2026-27 quarterly deadline was 7 August 2026.
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Quarterly updates are cumulative summaries from the beginning of the tax year to the relevant update period.
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You can send an update earlier in certain circumstances.
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Quarterly updates do not constitute four Self Assessment tax returns.
Quarterly UpdateDeadline
First update7 August
Second update7 November
Third update7 February
Fourth update7 May

2026-27 Quarterly Update Deadlines and Transitional Penalty Treatment

For the first mandatory MTD year, 2026-27, HMRC will require quarterly updates but will not apply penalty points for late quarterly updates during that tax year. Taxpayers still have to send the updates before they can complete the year's tax return/final declaration. Late Self Assessment returns and late payments remain subject to their applicable penalties.

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2026-27 quarterly update deadlines are 7 August 2026, 7 November 2026, 7 February 2027 and 7 May 2027.
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No penalty points are issued for late quarterly updates during 2026-27.
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The quarterly obligations still exist even though the first-year quarterly penalty points are paused.
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Late annual tax returns can still attract penalties.
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Late tax payments can still attract late-payment penalties.

Penalty Points From 2027-28 Onwards

For tax years after 2026-27, the MTD quarterly-update late-submission regime becomes points based. A taxpayer normally receives one penalty point for each missed quarterly deadline. Once the relevant threshold is reached, a £200 penalty is charged, and an additional £200 penalty can arise for each subsequent missed submission deadline under the rules.

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The first mandatory year has transitional treatment.
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The £200 amount is the penalty after reaching the relevant points threshold; it is not automatically charged for every first missed update.
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Penalty-point expiration and compliance periods also apply.
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Late tax returns have their own penalty consequences.
EventPenalty Position
Miss one quarterly deadline after 2026-27One penalty point
Reach 4 points under the mandated MTD regime£200 fixed penalty
Miss another submission after reaching the thresholdFurther £200 penalty can apply
2026-27 quarterly updatesNo penalty points for late quarterly updates

The Annual Tax Return and Final Declaration

MTD does not mean that taxpayers stop having an annual tax return. HMRC's current guidance says that after the year's quarterly updates and adjustments, the taxpayer completes and submits the Self Assessment tax return through compatible software for the relevant MTD years, with the statutory deadline generally 31 January after the end of the tax year. The final declaration is the final MTD submission step that confirms the tax position and has the legal function of completing the return.

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Quarterly updates do not replace the annual tax return.
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The 2026-27 MTD tax return is due by 31 January 2028.
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Final declaration is an MTD submission stage, not a separate fifth tax return.
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Other income such as interest, dividends or capital gains may still need to be reported.
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Reliefs, allowances, losses and other adjustments are dealt with in the final tax calculation.

End-of-Period Statements: Use Current HMRC Terminology

Older MTD material often refers to an End of Period Statement (EOPS). The current customer-facing HMRC process is better described as finalising business income and completing the final declaration. HMRC's current terminology guidance specifically says not to use 'final declaration' as a customer-facing product term, but its API/service documentation uses it for the final step of submitting the tax return. The page should therefore not present EOPS as the principal 2026 taxpayer-facing filing step.

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EOPS terminology appears in earlier MTD legislation and technical material.
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Current customer guidance focuses on quarterly updates, adjustments/finalising income and the tax return/final declaration.
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The final declaration is the final MTD submission step.
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Do not describe the final declaration as replacing the tax return entirely.
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Use current HMRC customer-facing terminology when explaining the process.

Exemptions From MTD ITSA

Not every taxpayer above a threshold must use MTD. HMRC provides automatic and application-based exemptions, including exemptions linked to digital exclusion and certain specific taxpayer circumstances. If exempt, the individual normally continues to report income and gains through Self Assessment in the usual way.

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Digital exclusion can support an exemption.
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Some exemptions are automatic; others require an application.
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Partnerships are currently automatically outside the mandatory MTD ITSA rollout.
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Certain taxpayers with specific Self Assessment supplementary pages or circumstances can qualify for exemptions.
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An exemption from MTD does not remove the underlying tax-reporting obligation.

Non-Resident Landlords and MTD ITSA

Being non-UK resident does not by itself prevent a landlord from falling within MTD ITSA. A person with UK property income must consider the normal MTD qualifying-income and exemption rules. The non-resident landlord's separate UK tax rules, including the Non-Resident Landlord Scheme where relevant, remain separate from the MTD digital-reporting requirement.

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Residence status is not itself a blanket MTD exemption.
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UK property income can be part of qualifying income.
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The threshold is based on qualifying income from property and self-employment.
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Non-Resident Landlord Scheme withholding and MTD reporting are separate compliance systems.
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A taxpayer should check whether they are already registered for Self Assessment.

Changes in Income Sources

If a sole trader or landlord adds or stops a self-employment or property income source, HMRC's current MTD guidance requires the taxpayer or agent to tell HMRC through the relevant online account/agent service. This is part of keeping the MTD obligations aligned with the taxpayer's actual income sources.

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New sole-trader income sources must be added where required.
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New property income sources can also require notification.
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Employment and limited-company income are not added as MTD business sources in the same way.
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Other income can still need to be included in the final tax return.

Partnerships and MTD ITSA

Partnerships are currently not within the mandatory MTD ITSA rollout timetable. HMRC has also clarified that an individual's share of partnership profit does not count toward qualifying income for the current MTD threshold calculation. This distinction is important for partners who also have sole-trader or property income.

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Partnerships do not currently need to use MTD ITSA under the mandatory 2026-28 timetable.
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A partner's share of partnership profit does not count toward qualifying income.
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The partner may still have separate MTD obligations for their own sole-trader/property income.
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Partnership income must still be reported in the tax return where required.

Practical 2026 MTD ITSA Workflow

A reliable MTD analysis starts with the previous tax return and the qualifying-income threshold, then checks whether the person is a sole trader or landlord, whether an exemption applies, and which start date follows. Once mandated, the taxpayer must maintain digital records, send quarterly updates by the 7th, complete year-end adjustments, submit the tax return/final declaration and pay the final tax liability by the relevant deadline.

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Step 1: identify whether the person is already registered for Self Assessment.
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Step 2: calculate qualifying income as gross self-employment plus property income before expenses.
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Step 3: use the relevant previous tax return to determine the MTD start year.
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Step 4: check exemptions.
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Step 5: obtain HMRC-compatible software.
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Step 6: create and preserve the required digital records.
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Step 7: submit four quarterly updates by 7 August, 7 November, 7 February and 7 May.
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Step 8: make year-end adjustments and include other income/gains.
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Step 9: complete the tax return/final declaration by 31 January after the tax year.
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Step 10: pay the tax due by the applicable payment deadline.
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Step 11: retain records and monitor penalty points from the post-2026-27 regime.

Frequently Asked Questions (6)

Mandatory MTD ITSA starts on 6 April 2026 for eligible sole traders and landlords whose qualifying income was more than £50,000 in the 2024-25 tax return. The threshold falls to more than £30,000 from 6 April 2027 using 2025-26 qualifying income, and more than £20,000 from 6 April 2028 using 2026-27 qualifying income.

Qualifying income is your total gross turnover from sole-trader self-employment and property income before expenses and tax. The income is considered together for the threshold. A share of profit from a partnership does not count toward qualifying income.

No. You send four quarterly updates summarising your digital records, but these are not four tax returns. You still complete the annual tax return and finalise your tax position, normally by 31 January after the end of the tax year. For MTD years, the final declaration is the final MTD submission step of that return process.

Yes. Non-UK residence does not itself exempt a landlord from MTD. A non-resident landlord with qualifying UK property income can fall within MTD ITSA if the applicable qualifying-income threshold and other conditions are met. The Non-Resident Landlord Scheme is a separate withholding system.

A spreadsheet can form part of a compliant workflow, but you need appropriate MTD-compatible software and digital links to HMRC where required. A spreadsheet by itself is not automatically a complete MTD solution. Bridging software can connect certain spreadsheet records to HMRC.

For the 2026-27 tax year, HMRC will not issue penalty points for late quarterly updates, although you still must submit them before completing your tax return. From later tax years, the points-based regime applies: normally one point per missed quarterly deadline, with 4 points triggering a £200 penalty for mandated taxpayers.
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2026 TAX SNAPSHOT

Standard Personal Allowance
£12,570
Standard allowance; specialist and Scottish rules can differ.
England / Wales / Northern Ireland Basic-Rate Band
£37,700
£50,270 including the standard £12,570 Personal Allowance.
4-Year FIG Regime
Maximum 4 tax years
Available to qualifying new UK residents after at least 10 years of non-UK residence.
IHT Long-Term UK Residence
10 of previous 20 years
Overseas-asset exposure can continue for 3–10 years after leaving, depending on residence history.

Summary Takeaways & Checklist

  • MTD ITSA becomes mandatory from 6 April 2026 for qualifying income over £50,000 based on the 2024-25 tax return.
  • The threshold falls to over £30,000 from 6 April 2027 and over £20,000 from 6 April 2028.
  • Qualifying income is gross turnover from self-employment and property income before expenses.
  • Quarterly updates are due on 7 August, 7 November, 7 February and 7 May.
  • Quarterly updates are not four tax returns; the annual tax return/final declaration still completes the year's tax position.
  • There are no penalty points for late quarterly updates during 2026-27, although the updates still have to be submitted.
  • From later years, missed quarterly deadlines are subject to the points-based regime, with 4 points normally triggering a £200 penalty for mandated taxpayers.
  • Digital records must be kept using HMRC-compatible software unless an exemption applies.
  • Non-resident landlords can fall within MTD ITSA if their qualifying UK property income meets the relevant conditions.
  • The mandatory rollout currently extends to the £20,000 threshold from 6 April 2028.

Official References & Manuals

GOV.UK Making Tax Digital for Income Tax CollectionHMRC MTD for Income Tax: Before You Use the GuideHMRC Check if You Need to Use MTD for Income TaxHMRC MTD Compatible SoftwareHMRC Send Quarterly UpdatesHMRC Submit Your Tax Return Under MTDHMRC MTD PenaltiesHMRC MTD ExemptionsHMRC MTD Update Notice

Related HMRC Guides

HMRC Expat Self-Assessment SA100 GuideUK Sole Trader Tax & Self-Assessment CalculatorUK Non-Resident Landlord Tax Guide