MTD for Income Tax: What to Do Before 7th August
Making Tax Digital (MTD) for Income Tax is now live, and if you’re a UK sole trader or landlord with gross income over £50,000, the first quarterly update deadline is fast approaching. With 7 August 2026 just weeks away, it’s crucial to understand if you’re in scope, what digital record-keeping means, and exactly what you need to submit for your first quarter.
Here’s everything you need to know, broken down clearly to help you meet your obligations efficiently and avoid penalties.
1. Who Must Comply from April 2026 and How to Check
If your gross qualifying income (turnover) from self-employment and/or property rental exceeded £50,000 in the 2024–25 tax year, you must use MTD for Income Tax from 6 April 2026.
Important: The £50,000 threshold applies to combined gross income from self-employment plus gross rental income, before expenses or reliefs. For example, if you are a freelance graphic designer earning £45,000 turnover and have rental income of £6,000 a year, your total qualifying income is £51,000, meaning you are in scope.
Other income sources do not count toward this test. Employment wages, dividends, and savings interest are excluded.
HMRC will send you a letter if they think you qualify, but the legal responsibility to check and comply rests with you, and the deadlines apply regardless of whether you receive notification.
2. What Digital Record Keeping Actually Means
Digital record-keeping means every income and expense item must be recorded digitally with details including date, amount, and category in MTD-compatible software.
You can use spreadsheets if they are digitally linked to your submission software. This means data must flow digitally between systems, so no manual copy-pasting from a spreadsheet to your software.
Paper records or manually entering figures from paper into software at the end of each quarter are not compliant. Your digital records must be the primary source, flowing seamlessly from the moment data is captured through to the HMRC submission.
3. Your First Quarterly Update: What to Submit by 7 August
Your first MTD quarterly update covers the period from 6 April to 5 July 2026 and must be submitted by 7 August 2026.
You’re submitting cumulative totals for this period, not a tax calculation. There are no tax payments or adjustments at this stage; reliefs and allowances will be accounted for in your year-end Final Declaration.
Each quarterly update is a snapshot , think of it as reporting your financial position rather than filing a mini tax return.
If you have multiple income streams (say self-employment and rental income), you submit separate quarterly updates for each. Unlike VAT’s periodic reporting, MTD Income Tax quarterly updates overwrite the previous submission, so each update reflects the full cumulative total to date.
4. The Rest of the Year: Key Deadlines at a Glance
After your first submission, the remaining quarterly update deadlines for 2026/27 are:
7 November 2026 (Q2: 6 July – 5 October)
7 February 2027 (Q3: 6 October – 5 January)
7 May 2027 (Q4: 6 January – 5 April)
Your Final Declaration, which replaces the traditional Self Assessment tax return, will be due 31 January 2028 for the 2026/27 tax year.
Remember, MTD changes how often you report, but not when you pay tax (at the monent). Payments remain due on 31 January and 31 July as usual.
Also, your 2025/26 Self Assessment tax return is still due by 31 January 2027, this remains separate from your MTD reporting.
5. The Soft Landing: What It Does and Does Not Protect You From
In your first year of MTD (starting April 2026), HMRC will not apply penalty points for late quarterly updates during 2026/27.
However, the Final Declaration must still be submitted on time or normal penalties will apply.
You must submit quarterly updates before you can file your year-end Final Declaration.
Looking ahead, the qualifying income threshold will reduce:
To £30,000 from 6 April 2027
To £20,000 from 6 April 2028
6. Choosing the Right Software: Practical Options for Sole Traders and Landlords
HMRC requires use of recognised software that meets MTD standards.
You have three main options:
Full cloud accounting platforms such as Xero or FreeAgent, which offer comprehensive bookkeeping and submission features
Budget-friendly tools designed for simpler cases and straightforward record-keeping
Bridging software that connects your digital spreadsheets to HMRC, letting you keep your preferred record-keeping tool while remaining compliant
Whichever route you consider, ensure your software is on HMRC’s published MTD-compatible list and that it maintains digital links throughout the process.
Speak to your accountant to select the best option tailored to your business situation.
Need Help Getting Started?
Not sure if MTD for Income Tax applies to you or need expert help setting up your digital records and software before the 7 August deadline?
Book a free discovery call with J-Benn Finance. We’ll review your situation, recommend the right software, and ensure your first quarterly update is submitted on time and correctly.
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