Making Tax Digital for Income Tax requires sole traders and landlords above an income threshold to keep digital records and send quarterly updates to HMRC from compatible software, followed by a final declaration replacing the familiar Self Assessment return.
Thresholds and start dates for Making Tax Digital have changed more than once. Check gov.uk for the dates that apply to you before planning around them.
LAST REVIEWED 27 AUGUST 2026 · BIZZLE
Three things. Records must be kept digitally in compatible software. Summary updates go to HMRC quarterly rather than once a year. And a final declaration at the end of the year replaces the Self Assessment return you file now.
What does not change is how much tax you pay or when you pay it. This is a change to reporting, not to the tax itself, which is worth knowing because it is widely misunderstood.
It applies to sole traders and landlords with qualifying income above a threshold, phased in by income level over several years, with the highest earners brought in first.
Both the thresholds and the start dates have been revised more than once. Rather than repeat a figure that may already be stale, check the current position on gov.uk — it is the one page worth reading directly from the source.
Qualifying income is gross income from self-employment and property combined, before expenses. That catches people who think of themselves as below the line because they are looking at profit.
Keep digital records as you go
Income and expenses recorded in compatible software, with digital links rather than retyping. This is the part that makes everything else easy or impossible.
Send a quarterly update
A summary of income and expenses for the period, submitted from your software. It is a summary, not a tax calculation, and it is not a payment.
Repeat for each quarter
Four updates across the year, on a standard quarterly cycle.
Make the final declaration
At the year end, confirm the figures, add anything else relevant to your tax position, and declare. This replaces the Self Assessment return.
If your records are already digital and current, very little. The quarterly update is a button rather than a project when the underlying bookkeeping is done.
If you reconstruct the year each January from a carrier bag, this is the change that ends that approach — four reconstructions a year is not viable, and the transition is far less painful done early than under a deadline.
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COMMON QUESTIONS
No. Payment dates are unchanged. The quarterly updates are reporting summaries, not tax bills, and this is the single most common misunderstanding about the regime.
Only with bridging software providing a digital link to HMRC, and the records themselves must be digital. A spreadsheet alone does not satisfy the requirement for those in scope.
You stay on Self Assessment as now, though thresholds fall over time as the regime phases in. Check gov.uk for where the line currently sits and when it moves.
Late updates earn a point under the same points-based penalty system VAT uses; a financial penalty follows once you reach the threshold, and points expire after a period of compliance. One missed update is not the disaster a missed final declaration is, but four in a year add up.
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