Making Tax Digital for Income Tax, in plain English
Most guides still open with “compulsory from April 2026”. That date has been and gone, and the people it applied to are already filing quarterly. If you are reading this because you have heard MTD is coming for you, the date you almost certainly need is 6 April 2027 — the point at which anyone with more than £30,000 of gross self-employment and property income comes into scope. This page explains what that actually means, who it catches, and what you have to do. There is no product pitch until you have the facts.
Last verified 31 July 2026. MTD rules have been delayed and re-scoped several times — re-check before you act.
The short version
Making Tax Digital for Income Tax replaces your annual Self Assessment return with four quarterly updates plus a final declaration, sent from software HMRC recognises. It arrives in three waves based on your gross self-employment and property income: over £50,000 started on 6 April 2026, over £30,000 starts on 6 April 2027, and over £20,000 is planned for April 2028.
Three things follow from that, and they are the three things people get wrong.
- The threshold is turnover, not profit. If you invoice £38,000 and keep £19,000 after costs, you are measured on the £38,000. Worked example below.
- Your start date is decided by an earlier tax year. The 6 April 2027 wave is judged on your 2025/26 income — a tax year that has already finished. You cannot change it now. You can only find out where you stand.
- It is a one-way door. Once you are in, you must be under the threshold for three consecutive tax years before you can leave.
This is not tax advice
Fizoral is an independent comparison site, not an accountancy practice. Everything below is general information for UK sole traders and landlords, verified on 31 July 2026. Confirm your own position with HMRC or with a qualified accountant before you act on it — the MTD timetable has already been delayed and re-scoped more than once. HMRC’s own guidance lives at gov.uk: Using Making Tax Digital for Income Tax.
Am I affected, and when?
Pick the band your combined gross self-employment and property income falls into. Gross means before expenses. If you want to type your actual figures in, use the full MTD eligibility checker.
Your gross self-employment income plus gross property income
£20,000 or less — outside MTD entirely. Combined gross self-employment and property income of £20,000 or less puts you outside Making Tax Digital for Income Tax. You carry on with Self Assessment as normal. If you have no qualifying income at all, you are outside scope and cannot opt in voluntarily.
£20,001 to £30,000 — April 2028, planned. The £20,000 threshold is planned to take effect in April 2028, based on your qualifying income in the 2027/28 tax year. “Planned” is the honest word: this wave has not yet happened and the timetable has moved before.
£30,001 to £50,000 — 6 April 2027. This is the live deadline. If your qualifying income for the 2025/26 tax year was over £30,000, you join Making Tax Digital for Income Tax on 6 April 2027. That tax year has already ended, so your figure is fixed — go and look it up.
Over £50,000 — already live since 6 April 2026. If your qualifying income for 2024/25 was over £50,000 you have been inside MTD for Income Tax since 6 April 2026. You should already be keeping digital records and sending quarterly updates. If you are not, speak to an accountant now rather than later.
Qualifying income is gross self-employment turnover plus gross property income, added together before expenses. Partnership income, dividends, savings interest, PAYE employment and pensions are excluded. Thresholds and dates verified 31 July 2026 — confirm your own position with HMRC or your accountant.
What is Making Tax Digital for Income Tax?
Making Tax Digital for Income Tax is HMRC’s programme to replace the once-a-year Self Assessment return for sole traders and landlords with digital record-keeping and four quarterly updates sent from recognised software, followed by a final declaration that settles the year.
It is often shortened to MTD for ITSA (Income Tax Self Assessment) or just MTD for Income Tax. It is a separate thing from MTD for VAT, which has applied to VAT-registered businesses for several years. If you already file VAT digitally, you are not automatically done — income tax is its own regime with its own thresholds and its own dates.
The change is best understood as a change of rhythm, not a change of tax. HMRC is not asking you for more tax, earlier. It is asking you to keep your books digitally as you go and to report a summary four times a year instead of reconstructing twelve months from a shoebox each January.
Who it applies to
Two kinds of income bring you into scope: self-employment (sole traders, freelancers, contractors who are not incorporated) and property (UK and overseas rental income). If you have both, they are added together. Limited companies are not in MTD for Income Tax — they pay corporation tax and are outside this programme.
Who it does not apply to
- Anyone under the thresholds. Combined gross self-employment and property income of £20,000 or less keeps you outside MTD for Income Tax entirely.
- People with no qualifying income. If you have neither self-employment nor property income, you are outside scope — and you cannot join voluntarily.
- Partnerships, on the basis of their partnership income. Partnership income is excluded from qualifying income.
- People whose income is only from employment, pensions, dividends or savings. None of that counts towards the threshold.
Exemptions and exclusions beyond the income thresholds — for example on grounds of digital exclusion — are set by HMRC and are not something we will summarise second-hand. If you think you may qualify for one, check HMRC’s guidance on gov.uk or ask your accountant.
Why “compulsory from April 2026” is now the wrong answer
April 2026 was the start date for one cohort only — people with qualifying income over £50,000 — and it has already passed. Repeating it as the headline in mid-2026 tells the largest remaining group of affected people nothing useful. The live deadline is 6 April 2027, for qualifying income over £30,000.
A lot of MTD content on the web was written in 2024 and 2025, when April 2026 was in the future and was the only date worth shouting about. It has not been updated. The result is that the group with the most to do right now — the £30,000 to £50,000 band, who have roughly eight months to prepare as of this writing — keeps landing on pages that describe a deadline that no longer concerns them.
So, plainly:
- If you are over £50,000: your date was 6 April 2026. You are already in it. Your question is not “when?” but “am I doing this correctly?”
- If you are over £30,000: your date is 6 April 2027. This is the one that matters now.
- If you are over £20,000: April 2028 is planned. Watch it, do not panic about it.
The honest caveat
The April 2028 wave is planned, not delivered. The MTD timetable has slipped before, more than once, and we are not going to pretend otherwise to make a cleaner story. The two dates you can plan around with confidence are 6 April 2026 (done) and 6 April 2027 (coming). Treat 2028 as a strong signal rather than a fixed appointment, and check gov.uk before you make an expensive decision on the back of it.
What “qualifying income” actually means
Qualifying income is your gross self-employment income plus your gross property income, added together before you deduct a single expense. It is turnover, not profit. This one definition decides whether you are in Making Tax Digital and which year you start, and it is the point that people get wrong most often.
The word “income” is doing a lot of damage here. In everyday speech, your income is what you end up with. In this rule, it is what came in the top of the business before anything went out of the bottom.
A worked example: why turnover and profit give different answers
Take a self-employed photographer with a small flat let out on the side. Here is her year.
| Line | Amount | Counts towards qualifying income? |
|---|---|---|
| Photography invoices raised (gross turnover) | £29,400 | Yes — in full |
| Rent received on the flat (gross, before costs) | £9,600 | Yes — in full |
| Part-time PAYE salary at a college | £11,000 | No — employment income is excluded |
| Dividends from a small share portfolio | £1,200 | No — dividends are excluded |
| Savings interest | £340 | No — savings interest is excluded |
| Camera kit, travel, studio hire, letting agent fees | −£14,800 | No — expenses are not deducted |
| Qualifying income for MTD | £39,000 | £29,400 + £9,600 |
| Actual taxable profit from those two trades | £24,200 | Not the test |
Illustrative figures, chosen to make the arithmetic visible. The rule they demonstrate — gross self-employment plus gross property, expenses not deducted, other income types excluded — is the verified rule.
Her profit is £24,200. If qualifying income were profit, she would be under £30,000 and would have nothing to do until at least 2028. But qualifying income is £39,000, so she is in the £30,000 to £50,000 band and her start date is 6 April 2027. That is a gap of nearly £15,000 between the number she thinks of as her income and the number HMRC measures her by — and it is the difference between being in scope next April and not being in scope at all.
Note also that her PAYE salary, dividends and savings interest add up to £12,540 and change nothing. A common and expensive assumption is that a big employed salary drags you into MTD. It does not. Only self-employment and property count.
The two-minute version
Include: every penny invoiced or received from self-employment, and every penny of rent received, UK or overseas, before costs.
Exclude: partnership income, dividends, savings interest, PAYE employment income, pensions, and anything you spent to earn the money.
Then: add the two included lines together and compare the total to £20,000, £30,000 and £50,000. Or let the eligibility checker do the arithmetic.
What actually changes, and what does not
Once you are inside MTD for Income Tax, one annual return becomes five submissions: four quarterly updates and a final declaration. Most of what surrounds it stays where it is.
What changes
- One return becomes five submissions. Four quarterly updates through the tax year, then a final declaration that pulls the year together and settles it.
- Records go digital. Your income and expense records have to be kept digitally, in a form your software can send to HMRC. A carrier bag of receipts and a January weekend no longer qualifies.
- You need recognised software. Submissions are made from software on HMRC’s recognised list, not by typing figures into a web form. Spreadsheet users can stay on spreadsheets, but need bridging software to make the submission.
- Bookkeeping becomes a habit, not an event. This is the real cost. The work is not much larger in total; it is spread out and it has dates attached.
- Leaving takes three years. Once you are in, you must be under the threshold for three consecutive tax years before you come back out.
What does not change
- How much tax you owe. MTD changes reporting, not the rates, allowances or the way profit is calculated.
- When you pay. MTD is a reporting reform. Do not assume your payment dates move — and do not take our word for your dates either. Confirm payment deadlines with HMRC, since they are not part of the verified fact set behind this page.
- The tax year. Still 6 April to 5 April.
- Your accountant. If someone already does your books, they can do this too. Ask them now what they want from you and when — the answer will shape which software you pick.
- Self Assessment, for everyone outside MTD. If you are under the thresholds, nothing about your filing changes.
What a quarterly update is — and is not
A quarterly update is a summary of your business income and expenses for the period, sent from your software. It is not a mini tax return, it is not a payment, and it is not a final figure — the final declaration at the end of the year is where the position is settled and where reliefs and adjustments are dealt with.
We have deliberately not printed exact quarterly submission deadlines on this page. Those dates are set by HMRC, they interact with elections you may or may not have made, and getting one wrong in print would be worse than not printing it. Our deadlines page sets out the period structure and tells you exactly where to confirm the submission dates that apply to you.
What you need to do next
Four steps, in order. The first two cost nothing and take an afternoon.
Step 1 — today
Find your real number
Look up your gross self-employment turnover and gross rent for the relevant tax year and add them. For the 6 April 2027 wave, that is 2025/26 — a year that has already closed, so the figure exists and cannot move. Do not estimate it from memory and do not use profit.
Step 2 — this month
Write your date down
Once you know your band you know your date: 6 April 2026 (over £50,000, already live), 6 April 2027 (over £30,000), or April 2028 planned (over £20,000). Put it in a calendar with a reminder three months before, because the preparation is what takes time, not the filing.
Step 3 — before your date
Get your records digital
This is the part people underestimate. Getting a year of paper and bank statements into a digital system is a bigger job than any quarterly submission will ever be. Start it early, and start it in the tax year before the one you are mandated in, so your opening position is clean.
Step 4 — last
Pick software, cheaply
Software is the last decision, not the first, and it is a smaller decision than the marketing suggests. Every serious UK product is MTD-recognised. Choose on cost over two years, on whether it fits your actual trade, and on what your accountant already uses.
Do I need to buy software for MTD?
You need software HMRC recognises, but you do not need to spend much — and possibly not anything. MTD compatibility is not a differentiator between the major UK platforms. Xero, QuickBooks, FreeAgent and Sage are all on HMRC’s recognised list. It is table stakes, and any page that sells you a plan on the strength of “MTD ready!” is selling you a feature every competitor also has.
We say that knowing it costs us money. Fizoral is funded by affiliate commission, and the honest version of this section is worth less to us than a scary one would be. Here are the three facts in this category that reduce our income, printed anyway:
- FreeAgent is free permanently if you bank with NatWest, RBS, Ulster Bank or Mettle (Mettle requires at least one transaction a month). Not a trial — free for as long as you hold the account.
- Sage has a genuinely free tier for sole traders: £0, capped at five invoices a month, non-VAT only.
- QuickBooks is £121.20 cheaper than Xero over 24 months on entry plans — £186 against £307.20, ex VAT.
The one trap worth naming: entry-level plans are not all equivalent. QuickBooks Sole Trader at £10 a month cannot file a VAT return, and neither Sage sole trader tier can. If you are VAT registered, or expect to be within two years, price from the plan that actually files VAT rather than the headline one.
All prices ex VAT, verified 31 July 2026. Sage quotes its prices plus VAT; we have normalised everything to ex VAT so the comparison is like for like. Promotional rates are new-customer offers that expire, usually after six months, which is why we price everything over 24 months instead.
Head to head
Xero vs QuickBooks: the 24-month cost
QuickBooks wins on price at £186 against Xero’s £307.20 — until VAT enters the picture, which cuts the gap to £9.60.
Read the comparison →
Head to head
Xero vs FreeAgent for sole traders
FreeAgent costs £399 over 24 months — or £0 if you bank with NatWest, RBS, Ulster Bank or Mettle.
Read the comparison →
Head to head
Xero vs Sage: free tier versus paid
Sage has a real £0 sole trader tier at five invoices a month. Above that, Xero Ignite’s £307.20 beats Sage Start’s £378.
Read the comparison →
Prefer to go straight to the vendors? These are plain public UK links, not tracking links, and today they earn us nothing: Xero UK · QuickBooks UK · FreeAgent · Sage UK. Always confirm current pricing and MTD status on the vendor’s own site, and check HMRC’s own list of recognised software on gov.uk before you subscribe.
Everything else in the MTD guide
This page is the pillar. Each of these goes deeper on one part of it.
Decision
Am I affected by MTD?
Type in your gross self-employment and property income and get your cohort, your date and your next step. Handles all four bands.
Timetable
MTD deadlines and the three mandation dates
All three waves, which tax year’s income decides each, and what a year inside MTD looks like from April to April.
Process
What you actually submit each quarter
What goes into a quarterly update, what does not, and why it is not a mini tax return.
Compliance
Digital records you have to keep
What “digital records” means in practice, and the migration job people underestimate.
Property
MTD for landlords
How property income is counted, joint ownership, and why a modest portfolio can cross the threshold on turnover alone.
Spreadsheets
Can I keep using Excel?
Yes, with bridging software. What that costs and when it stops being worth it.
Making Tax Digital: common questions
Is Making Tax Digital compulsory from April 2026?
It was compulsory from 6 April 2026 for one group only: people whose qualifying income was over £50,000 in the 2024/25 tax year. That group is already inside Making Tax Digital and filing quarterly updates now. Everyone else has a later date. The next one is 6 April 2027, for qualifying income over £30,000 in 2025/26.
Is qualifying income based on turnover or profit?
Turnover. Qualifying income is your gross self-employment income plus your gross property income, added together before you deduct any expenses. This is the single most misunderstood point in Making Tax Digital: a sole trader who invoices £46,000 and takes home £24,000 of profit is measured on the £46,000, which puts them in the 6 April 2027 cohort.
What income does not count towards the MTD threshold?
Partnership income, dividends, savings interest, PAYE employment income and pension income are all excluded. Only gross self-employment income and gross property income are counted. A large employed salary alongside a small freelance sideline does not, by itself, bring you into MTD.
Does MTD replace the Self Assessment tax return?
For people inside MTD for Income Tax, yes. Instead of one Self Assessment return each year you send four quarterly updates plus a final declaration. If you are outside the thresholds, Self Assessment continues exactly as it does today.
Do I need to buy accounting software for MTD?
You need software HMRC recognises, but that is a low bar in 2026 — Xero, QuickBooks, FreeAgent and Sage are all on HMRC’s recognised list, and so are cheaper and free options. MTD compatibility is table stakes, not a reason to pay more. FreeAgent is free permanently with a NatWest, RBS, Ulster Bank or Mettle account, and Sage has a genuinely free sole trader tier. Check HMRC’s own list on gov.uk before you commit.
How do I get out of MTD once I am in it?
Once you are inside MTD for Income Tax you have to be under the threshold for three consecutive tax years before you can leave. One quiet year does not take you back out. Treat entry as a one-way door and set your bookkeeping up as something you can sustain, not something you can survive for twelve months.
What are the penalties for missing an MTD deadline?
HMRC operates a points-based penalty system for late submissions under Making Tax Digital, but we are not going to print point values or penalty amounts we have not verified — an invented figure here would be worse than no figure. Check the current penalty rules directly on gov.uk or ask your accountant. If you want to know how we decide what we will and will not publish, our research method is written down.
I am a landlord with one flat. Am I really in scope?
Possibly, because the test is gross rent, not profit. A single property let at £1,800 a month produces £21,600 of gross property income, which is already over the £20,000 line even before any self-employment is added. Mortgage interest, agent fees and repairs do not reduce the figure for this test. Run your numbers through the eligibility checker and read the landlord page.
The bottom line
If your gross self-employment and property income together came to more than £30,000 in 2025/26, your Making Tax Digital start date is 6 April 2027 and the work to prepare for it is bookkeeping, not shopping.
Go and find your real gross figure. Not your profit, not what landed in your current account — the number at the top of your accounts. Then check it against the thresholds, write your date down, and get your records into a digital system with a full tax year to spare. Software is the cheapest and last part of this, and there is a free option for a lot of people.
And confirm it with HMRC or your accountant. We have been careful here: every threshold and date on this page is verified, and where we do not have a verified figure — exact quarterly submission dates, penalty points — we have said so rather than guessed. That is the deal. How we research explains the rest of it.