What is Making Tax Digital?
From April 2026, if you are a sole trader or landlord with a gross income (turnover) of more than £50,000 from self-employment and/or property, you will no longer file just one Self Assessment return a year.
Instead, you will need to keep digital records and send updates to HMRC every three months, as well as a final year-end Tax Return. Your five submissions must use software that is compatible with HMRC systems.
When will you move to Making Tax Digital?
When you move to Making Tax Digital depends on your gross income (turnover):
- Income over £50,000: from 6 April 2026 (based on your tax return for 2024/2025)
- Income over £30,000: from 6 April 2027 (based on your tax return for 2025/26)
- Income over £20,000: planned from 6 April 2028 (based on your tax return for 2026/27)
HMRC has a useful checker you can use to find out what is and isn't included as qualifying income.
At PPT, we can support you in whatever way you need, taking the pressure away from you - from doing your bookkeeping and making submissions on your behalf, to advising you on the best software to use if you plan to manage Making Tax Digital yourself.
What you need to know about Making Tax Digital
If you are eligible, you will need to:
- Create and maintain digital records of your income and expenses using software that is compatible with HMRC's systems, starting from 6 April. You will not be able to do this through HMRC's existing online Self-Assessment route.
- Send updates of your income and expenses every three months (Quarterly Updates). NOTE: If you do not submit your Quarterly Updates by the correct deadline, you could be penalised.
- Complete your end-of-tax-year Tax Return, which should be submitted after your fourth Quarterly Update, and before the 31 January deadline (the current Self-Assessment deadline). If you have other income, such as interest on savings, you'll need to add this. You can make amendments to Quarterly Updates before submitting your final Tax Return.
- Pay your tax by 31 January, just as you would with Self-Assessment - so any tax you still owe for the previous tax year, and your first payment on account for the tax year ahead.
We can help with:
Bookkeeping
Choosing the right software
Preparing Quarterly Updates
Linking the Quarterly Updates to your final Tax Return submission
FAQs
HMRC will look at your most recent Self-Assessment tax return, and include the following income streams to establish when you will be mandated into MTD:
- Self-employment income (turnover)
- Self-employment other income
- UK property income
- Other UK property income
- Foreign property gross income
When you move to Making Tax Digital depends on your gross income (turnover):
- Income over £50,000: from 6 April 2026
- Income over £30,000: from 6 April 2027 (based on your tax return for 2025/26)
- Income over £20,000: planned from 6 April 2028 (based on your tax return for 2026/27)
Once you are eligible for MTD, you will only become exempt if your qualifying income falls below the MTD income threshold for three consecutive tax years (based on filed tax returns, or Quarterly Updates where the deadline has not yet passed for filing the return for a year).
Each quarterly update will need to be filed by the 7th of the month following the quarter-end. By default, the quarters will be based on the dates of the tax year and will cover the following periods, with the following deadlines, regardless of the accounting period end of the business:
| Period covered | Filing deadline | |
|---|---|---|
| Quarterly update 1 | 6 April to 5 July | 7 August |
| Quarterly update 2 | 6 April to 5 October | 7 November |
| Quarterly update 3 | 6 April to 5 January | 7 February |
| Quarterly update 4 | 6 April to 5 April | 7 May |
Alternatively, a ‘calendar quarters election’ will be possible, which will align the quarterly update periods with calendar months instead of with the tax year. This may be simpler for businesses which compile their accounts to a month-end date rather than to match the tax year:
| Period covered | Filing deadline | |
|---|---|---|
| Quarterly update 1 | 1 April to 30 June | 7 August |
| Quarterly update 2 | 1 April to 30 September | 7 November |
| Quarterly update 3 | 1 April to 31 December | 7 February |
| Quarterly update 4 | 1 April to 31 March | 7 May |
Quarterly Updates will be cumulative, so if you discover an error in a previous submission, it can be corrected the following quarter. You will also need to correct the underlying digital records. Errors made in quarter four must be corrected before the Tax Return filing deadline (eg 31 January 2028 for 2026/27)
Yes, as well as send Quarterly Updates to HMRC every three months, you will also need to complete a final year-end Tax Return. Your five submissions must use software that is compatible with HMRC systems.
HMRC's aim with Making Tax Digital is to help taxpayers avoid errors and make managing their tax affairs simpler and more accurate. By moving to digital record-keeping and quarterly updates, businesses and individuals can see an up-to-date estimate of their tax bill throughout the year, helping them plan ahead and avoid any last-minute surprises. VAT-registered businesses have already made this switch and reported benefits including time savings and improved business operations. For more detail, visit HMRC's Benefits of Making Tax Digital page.
