What is Making Tax Digital?

Written by the Quidtrail team · Facts last checked 18 October 2026

The short answer: Making Tax Digital (MTD) is HMRC's programme for moving tax records and reporting onto software. For Income Tax, HMRC describes it as "a new way for sole traders and landlords to report their income and expenses". From 6 April 2026, sole traders and landlords must use it if their income from self-employment and property is over £50,000 (GOV.UK). Instead of one annual return, you keep digital records, send quarterly updates and then submit your tax return through compatible software.

MTD for VAT and MTD for Income Tax

MTD already applies to VAT. GOV.UK says "All VAT-registered businesses should now be signed up for Making Tax Digital for VAT" (GOV.UK). MTD for Income Tax is the newer part. It covers individuals with self-employment or property income, and it's what the rest of this page is about.

Who has to use MTD for Income Tax

You need it if you're an individual registered for Self Assessment, you have income from self-employment, property or both, and your qualifying income is over the threshold (GOV.UK):

Source: GOV.UK.

Qualifying income is your total self-employment and property income before expenses. It doesn't include things like PAYE wages, dividends or pensions (GOV.UK). See what counts as qualifying income, or try our Do I need MTD? checker.

Partnerships don't need to use MTD for Income Tax yet. HMRC will set out a timeline later (GOV.UK).

What changes

1. Digital records. You keep records of your self-employment and property income and expenses in compatible software, or in a spreadsheet linked to bridging software. Each record shows the amount, date and category (GOV.UK).
2. Quarterly updates. You send HMRC a summary for each income source every quarter, by 7 August, 7 November, 7 February and 7 May (GOV.UK). They're summaries, not tax returns.
3. Tax return through software. After the year ends, you make any adjustments, add your other income, and submit your tax return using compatible software by 31 January (GOV.UK). You'll often see this called the "final declaration".
4. New penalties. Late submissions earn penalty points, with a financial penalty once you reach the threshold. There are no penalties for late quarterly updates in 2026 to 2027 (GOV.UK). See MTD penalties.

What stays the same

• How profit is worked out. HMRC's MTD guidance is about how you keep records and report. The usual rules on income and allowable expenses still apply, and you make year-end tax adjustments before submitting your return (GOV.UK).
• The 31 January deadline for the tax return and for paying (GOV.UK).
• Other income still goes on your tax return. You add it in your software before you submit (GOV.UK).

Software

HMRC doesn't provide MTD software. You choose a commercial product, and some are free (GOV.UK). HMRC's software finder lists compatible products. See our A to Z software directory, free MTD software and spreadsheets and bridging software.

Exemptions

Some people are exempt, either automatically (for example, qualifying income of £20,000 or less, or no National Insurance number) or by applying (for example, if you're digitally excluded). If you're exempt, you still file Self Assessment as normal (GOV.UK). See MTD exemptions.

Signing up

From September 2026, HMRC started signing up people who need MTD for 2026 to 2027 and hadn't signed up, where its records show qualifying income over £50,000 for 2024 to 2025. You can also sign yourself up (GOV.UK). See how to sign up for MTD.

Related: MTD for Income Tax guide · MTD for landlords · MTD for sole traders · Do I need MTD?

Last checked against GOV.UK on 18 October 2026. Not tax advice.