If you are a sole trader or landlord earning more than £50,000 a year, Making Tax Digital for Income Tax is no longer something coming down the track. It arrived on 6 April 2026 — which means you are already inside the new system, whether you have taken action or not.
And there is a date you need to know right now: 7 August 2026. That is the deadline for your very first quarterly update to HMRC, covering the period from 6 April to 5 July 2026. If that is news to you, do not panic — but do read on.
What Is Making Tax Digital for Income Tax?
Making Tax Digital (MTD) is the government’s long-running programme to bring the UK tax system fully online. Most VAT-registered businesses have been living with MTD for VAT for several years now. The bigger change — MTD for Income Tax Self Assessment, often shortened to MTD ITSA or MTD for IT — has now arrived for the first wave of taxpayers.
In plain English, it changes two things about how you manage your tax affairs:
- Digital record-keeping: You must keep your income and expenses records digitally, using HMRC-recognised software. Paper books and manually updated spreadsheets are no longer sufficient on their own.
- Quarterly updates to HMRC: Instead of one annual Self Assessment return, you send HMRC a summary of your income and expenses four times a year, plus a final declaration at the end of the tax year.
It is not just a new form. It is a fundamentally different rhythm for managing your tax affairs throughout the year.
Who Must Sign Up Right Now?
From 6 April 2026, MTD for Income Tax is mandatory for sole traders and landlords whose combined qualifying income from self-employment and property exceeds £50,000 a year. That qualifying income is based on your gross income — before expenses — from a recent tax year. So if you are a builder in Ipswich with £55,000 in annual turnover, or a landlord in Suffolk with rental receipts of £52,000, you are in scope.
The following groups are not yet in scope:
- Those with qualifying income below £50,000
- People whose only income is from employment under PAYE — no self-employment or property income
- Limited companies (separate rules apply)
- Certain exempt groups, including those with a genuine inability to use digital tools
If you have a mix of income types — some employed income, some freelance work, and a rental property, for example — the calculation can get complicated. That is exactly the kind of situation where a quick conversation with us is worth having before you assume you are in or out of scope.
Your Quarterly Deadlines for 2026/27
Here is how the tax year breaks down into quarters. There are four quarterly updates to make, plus a final declaration at year-end:
- Quarter 1: 6 April to 5 July 2026 — deadline 7 August 2026
- Quarter 2: 6 July to 5 October 2026 — deadline 7 November 2026
- Quarter 3: 6 October 2026 to 5 January 2027 — deadline 7 February 2027
- Quarter 4: 6 January to 5 April 2027 — deadline 7 May 2027
- Final Declaration (full 2026/27 tax year) — deadline 31 January 2028
The quarterly updates are summaries of your income and expenses for each three-month period, submitted directly to HMRC through your software. You are not paying your tax bill four times a year — the updates give HMRC a running picture of your income, and you settle up through the final declaration and payment in the usual way. What does change is how much HMRC knows about your finances throughout the year.
The 2026/27 Soft Landing — What It Actually Means
HMRC has confirmed a “soft landing” for the first year of MTD ITSA: during 2026/27, you will not receive a penalty point for a late quarterly update. This is an acknowledgement that switching to a new system takes time. Businesses need to find software, learn new processes, and get properly set up.
But the soft landing has important limits. Here is what it does not protect you from:
- You still need to sign up to MTD ITSA. If you are in scope and have not registered yet, that needs to happen now — not next year.
- The final declaration rules are unchanged. Fail to submit by 31 January 2028 and the standard Self Assessment late-filing penalties apply.
- Late payment penalties still apply. If you underpay tax, HMRC will charge interest regardless of the soft landing.
- Good habits matter now. The soft landing is a grace period to help you find your feet — not a reason to ignore the system entirely.
Imagine you run a small holiday letting in the Suffolk countryside. You have been filing your Self Assessment return every January for years — a bit of a scramble to pull the figures together each time. Under MTD, instead of one annual crunch, you will be doing a short quarterly check-in throughout the year. This first year, if you are a couple of weeks late on the August deadline while you get set up, there is no penalty point. But the habit you form now is the one that carries you through 2027 and beyond.
What Software Do You Need?
HMRC does not provide software for MTD for Income Tax. You will need to use a third-party product from HMRC’s approved list. Prices and features vary widely, so it is worth choosing something that fits your situation rather than going with the first name you recognise.
Some of the most widely used options include:
- QuickBooks — popular across small businesses, with a strong mobile app and good bank feed integration
- Xero — well established, particularly suited to those who want their accountant to access their records directly
- FreeAgent — designed with freelancers and sole traders in mind; often bundled free with certain business bank accounts
- Sage Accounting — a long-established name, particularly among slightly larger or more traditional businesses
- Hammock — built specifically for landlords managing property income
Before committing, check that your chosen software appears on HMRC’s official MTD for Income Tax approved list — not all accounting software qualifies. Your accountant can help you choose something that works for your situation and that they can access to support you, which saves time and duplication.
What You Will Do Each Quarter
Once you are properly set up, here is what the quarterly routine looks like:
- Keep records up to date throughout the quarter. Log income as it comes in, record expenses as you incur them. The further you let this slip, the harder it becomes to catch up before the deadline.
- Categorise your transactions. Your software will prompt you to assign income and costs to the right categories — business mileage, materials, rental income, professional fees, and so on.
- Submit your quarterly update. This is a few clicks from within your software, sending a summary directly to HMRC. It is not a full tax return.
- Review HMRC’s running estimate. After each submission, HMRC will display an estimated tax liability based on what you have sent so far. This is genuinely useful for planning your cash flow — no more January surprises.
- File your final declaration by 31 January 2028. At year-end, you review and confirm all your figures, add any additional income, claim remaining reliefs, and submit. This replaces the traditional Self Assessment return.
What About Penalties?
HMRC has replaced the old penalty system with a points-based model for quarterly submissions. Each missed quarterly deadline earns one penalty point. Once you accumulate four penalty points, you receive an automatic £200 fine. Every further late submission adds another £200. Points can be cleared by filing on time for a sustained period.
Four missed deadlines — an entire year of ignoring the system — and you are in financial difficulty very quickly. As noted above, penalty points for quarterly submissions are suspended during the 2026/27 soft landing year. But forming the habit of filing on time now, while there is no real consequence for being a little late, means the full system in 2027/28 will feel effortless.
Lower Thresholds Are Coming — Who Joins Next?
MTD for Income Tax does not stop at £50,000. HMRC has confirmed a phased expansion:
- April 2027: Those with qualifying income above £30,000 must join
- April 2028: Those with qualifying income above £20,000 must join
If your income sits between £30,000 and £50,000, April 2027 is less than a year away. If you are between £20,000 and £30,000, April 2028 is your deadline. Neither date is so far away that you can ignore this indefinitely — and starting to get your digital records in order early is always better than a last-minute scramble.
What About Spreadsheets and Paper Records?
Many well-run businesses across Ipswich and Suffolk have managed their finances perfectly well for years with a spreadsheet and a folder of receipts. Under the old system, that worked fine.
Under MTD for Income Tax, your records need to be in a format that feeds directly into HMRC-compliant software and can be submitted digitally. A standard Excel spreadsheet does not do that on its own, though some “bridging software” can act as a go-between. Bridging software is a short-term fix — it adds an extra moving part and is less reliable than using proper accounting software from the start. If you are still on paper or a spreadsheet system, now is the year to make the move.
What This Means for You
Depending on where you stand, here is what to do next:
- Income over £50,000 and not yet signed up: Act now. The first deadline is 7 August 2026. Contact us and we will help you register with HMRC, choose the right software, and get your first submission sorted before the deadline.
- Already signed up and using compatible software: Make sure your Q1 records (April to July 2026) are complete and that your software is connected to your HMRC account, ready to submit by 7 August.
- Income between £30,000 and £50,000: Not mandatory yet, but April 2027 is on the horizon. Start thinking about digital record-keeping and software now so you are ready in good time.
- Income between £20,000 and £30,000: April 2028 is your deadline. You have time, but MTD is heading your way — adapting early is far less stressful than a last-minute rush.
This is a general guide, not personal advice — please check with us about your own situation.
Making Tax Digital for Income Tax is one of the biggest changes to everyday tax administration in a generation. At KBL Accounts, we are already helping sole traders and landlords across Ipswich and Suffolk navigate the new system — from signing up with HMRC and choosing the right software, to making sure those first quarterly submissions go in without a hitch. If you are not sure where you stand, or worried you have missed something, get in touch. The 7 August deadline is closer than it looks.
