Does Making Tax Digital affect me?

1. Check whether it applies to you

You need to use Making Tax Digital for Income Tax if you are a sole trader or a landlord registered for Self Assessment, you get income from self-employment or property or both, and your qualifying income is more than the threshold for the year.¹

Qualifying income is your total income from self-employment and property, before expenses (your turnover), based on the tax return you sent for the earlier tax year.² Wages from a job, your share of partnership profit, dividends and pensions do not count.² If you own a property jointly, your share of the income counts.²

HMRC's figures for 2023 to 2024 show 864,000 sole traders and landlords with qualifying income over £50,000. See who it affects.

2. Check whether you are exempt

• Automatically exempt: if your qualifying income is £20,000 or less.³
• Partnerships: do not need to use it yet. HMRC says it will set out a timeline later.³
• You can apply for an exemption if it is not reasonable for you to use software, for example because your age, a health condition or a disability stops you using a computer, tablet or smartphone, or you cannot get internet access where you live or work. Not being familiar with software, or the time or cost of signing up, are not accepted reasons on their own.³
• To apply, call or write to HMRC using the Self Assessment general enquiries contact details. HMRC aims to reply within 28 calendar days.⁴

3. Get software that works with it

You need software that works with Making Tax Digital for Income Tax. GOV.UK has a tool to find it, and says free products are available for people with simple tax affairs, though they may have limits such as a set number of transactions.⁵ If you keep your records in a spreadsheet, bridging software can connect to it and send your updates to HMRC.⁵ You only need digital records of your self-employment and property income and expenses.⁵

4. Sign up, or check whether HMRC has signed you up

To sign up yourself you must be registered for Self Assessment and have sent a tax return in the last 2 years. If you use an agent, such as an accountant, they can sign you up instead. From September 2026, HMRC started signing up people who need to use it for 2026 to 2027 and had not signed up themselves.⁶

5. Send quarterly updates, then your tax return

Quarterly update deadlines (standard update periods)

Update period	Deadline
6 April to 5 July	7 August
6 April to 5 October	7 November
6 April to 5 January	7 February
6 April to 5 April	7 May (the following tax year)

If your accounting period runs from 1 April to 31 March, you can choose calendar update periods instead (1 April to 30 June, and so on), with the same deadlines.⁷ You still send a tax return and pay any tax owed by 31 January after the end of the tax year.⁸

6. Know the penalty rules

• There are no penalties for missing a quarterly update deadline for the 2026 to 2027 tax year.⁸
• After that, missed deadlines earn penalty points. At 4 points you get a £200 penalty, and another £200 each time you miss a further deadline.⁸
• Below 4 points, each point is removed 24 months after the missed deadline.⁸
• Late payment penalties also apply to tax paid late. GOV.UK sets out the rates and a first-year allowance.⁸

Do you need an accountant for it?

No law says you must use one. Some people use software and do it themselves; others pay an accountant or bookkeeper to keep the records and send the updates. If you have not used software or an agent before, this is the biggest change, and it may be worth getting help before your first deadline.