Am I affected by Making Tax Digital for Income Tax?
Yes, if you are a sole trader or landlord with qualifying income over £50,000. This has applied since April 2026. The threshold drops to £30,000 in April 2027 and £20,000 in April 2028. Whether you are in scope is based on the tax return you have already filed.
Is the threshold based on profit or turnover?
Gross income, before expenses. If you invoice £80,000 and your costs are £30,000, your qualifying income is £80,000. Self-employment and property income are added together for the test.
When are the quarterly updates due?
7 August, 7 November, 7 February and 7 May, covering the quarters to 5 July, 5 October, 5 January and 5 April. They are summaries and must be filed from MTD-compatible software.
Do I still file a tax return?
Not in the current form. After the year end, a final declaration replaces the tax return. Reliefs, adjustments and other income are dealt with at that stage.
Does my limited company count towards the threshold?
No. Only your own self-employment and property income count towards the threshold. Your company has its own obligations, including MTD for VAT if it is VAT registered.
What happens if I am below the threshold?
Nothing is required yet, although you can join voluntarily. If you are close to the next threshold, it is worth bringing your bookkeeping up to date before it becomes compulsory.
Are there penalties for a late quarterly update?
Not for 2026/27. HMRC is not issuing penalty points for late quarterly updates in the first year, and the same relief applies to anyone joining in April 2027 for their first four updates. The updates still have to be sent before the final declaration, and the normal penalties for late returns and late payment still apply.
I am already in MTD. Do I still file a return by 31 January 2027?
Yes. Your 2025/26 return is a normal self assessment return, due online by 31 January 2027 with any tax owed. MTD only covers 2026/27 onwards, and your first final declaration is due by 31 January 2028.
How do I know if I join in April 2027?
HMRC looks at the qualifying income on your 2025/26 return, the one due by 31 January 2027. If it is over £30,000, you join from 6 April 2027 and your first quarterly update is due by 7 August 2027.
