Making Tax Digital for Income Tax: who it affects and when

This is general information about UK rules, checked on the date above. It is not legal advice, and rules change. For a decision that matters, check the sources below or ask a qualified adviser.

For years, many sole traders kept a box of receipts and did their tax once a year. Making Tax Digital for Income Tax ends that routine for a growing number of people. The first group started in April 2026, and the rules reach more businesses in each of the next two years.

The short version

• Since 6 April 2026, sole traders and landlords with qualifying income over £50,000 must use it.¹
• Those over £30,000 in the 2025 to 2026 tax year will need to use it from 6 April 2027.¹
• Those over £20,000 in the 2026 to 2027 tax year will need to use it from 6 April 2028.¹
• It means keeping digital records, sending quarterly updates and using compatible software.²

Who has to do it, and when

The figures come from HMRC’s guidance.¹

Qualifying income is the key term. It is your total income from self-employment and property, before expenses, so it means your turnover rather than your profit. It is based on the tax return you submitted the previous year.³

This catches people out. A decorator with £35,000 of sales and £15,000 of materials might think of themselves as earning £20,000, but for this purpose they would be over the £30,000 line.

Partnerships will also need to use it in future, and HMRC says it will set out the timeline for that later.¹ Some people may be exempt, for example if they are digitally excluded, and HMRC’s guidance explains how that works.¹

What you actually have to do

HMRC’s guide to using the service has three main jobs:²

1. Create digital records of your self-employment and property income and expenses.
2. Send quarterly updates through compatible software.
3. Submit your tax return through it at the end of the year.

From September 2026, HMRC has been signing up people who need to use it for 2026 to 2027 and have not signed themselves up.³ If you think that might be you, check rather than wait for a letter.

Penalties in the first year

If you had to start from 6 April 2026, HMRC will not apply penalty points for late quarterly updates during the first tax year. Penalties still apply for late tax returns, or if you pay your tax bill after the due date.³

HMRC states this for people starting from 6 April 2026, so anyone starting in 2027 or 2028 should check the rules for their own start date.

Can you keep your spreadsheet?

Possibly. HMRC’s guidance on choosing software describes options including software that connects to existing records, such as those held in spreadsheets. This is sometimes called “bridging software”.⁴ So you may not need to throw away a system that works. You do, however, need something compatible to send the information, and your records must still meet the digital record requirements.

Getting ready

These are our practical suggestions if you are not yet in scope:

1. Work out your qualifying income now. Look at your last return, and add together your self-employment and property income before expenses.
2. Start recording digitally early. HMRC allows people to volunteer before they have to.³ A trial year with low stakes is much better than a rushed start.
3. Separate your business banking. It makes categorising transactions far simpler.
4. Capture receipts as they happen. Quarterly reporting does not work well with a shoebox.
5. Talk to your accountant, who may recommend particular software.

What this does not cover

Limited companies are not in Making Tax Digital for Income Tax, because it applies to self-employment and property income. They have different record and filing duties, as explained in our guide to how long to keep business records. Income tax rules can also change, so always check HMRC’s current guidance.

A useful side effect

Quarterly reporting can be a nuisance, but it also forces you to look at your numbers four times a year rather than once. Once your income and costs are digital, you can see what is making money while you can still do something about it.

That is what our admin and sales dashboards are designed for. They are not a replacement for your accounting or Making Tax Digital software, and we are not tax advisers, but they can show you sales, products and sites in one place.