MTD for Income Tax: A Practical Walkthrough for Year One
Making Tax Digital (MTD) for Income Tax is now mandatory from 6 April 2026 for many self-employed individuals and landlords. This new system introduces digital record-keeping and a shift to quarterly reporting requirements.
Who Must Comply?
As of April 2026, you must comply if your combined annual gross income (turnover before expenses) from self-employment and property exceeds £50,000.
Looking Ahead: The threshold will lower to £30,000 in April 2027, and down to £20,000 in April 2028.
How Does It Work?
You can no longer use the standard HMRC portal to type in your final figures manually. You are required to use MTD-compatible software (or spreadsheets linked with "bridging software") to record transactions digitally as they happen and submit updates directly to HMRC.
What Are the Key Deadlines?
Instead of filing just once a year, you are required to submit four quarterly updates, followed by a final year-end declaration. For the 2026/2027 tax year, the core deadlines are:
- 7 August 2026: First quarterly update (covering 6 April to 5 July)
- 7 November 2026: Second quarterly update (covering 6 April to 5 October)
- 7 February 2027: Third quarterly update (covering 6 April to 5 January)
- 7 May 2027: Fourth quarterly update (covering 6 April to 5 April)
- 31 January 2028: Final Declaration and tax payment deadline
(Note: These quarterly updates show year-to-date summaries of your income and expenses; you do not need to make complex tax adjustments until the final year-end declaration.)
Word of Warning
HMRC is using a points-based penalty system for late submissions. To help taxpayers adjust during this first transition year (2026/2027), late submission penalty points will only apply to the final year-end return, meaning you will not receive penalty points for late quarterly updates in year one. However, late payment interest and penalties still apply normally.