Making Tax Digital for Income Tax is changing how many sole traders and landlords maintain accounting records and report information to HMRC. Preparing early will make the transition considerably easier.
Who needs to use Making Tax Digital?
You may need to use Making Tax Digital for Income Tax when you are an individual registered for Self Assessment, receive income from self-employment or property, and your qualifying income exceeds the relevant threshold.
Phased introduction
- From 6 April 2026: qualifying income over £50,000.
- From 6 April 2027: qualifying income over £30,000.
- From 6 April 2028: qualifying income over £20,000.
Qualifying income is broadly your gross income from self-employment and property before expenses, based on the relevant previous tax return.
What will you need to do?
Once the rules apply, you or your accountant will need to use compatible software to:
- Create, maintain and correct digital records of business income and expenses.
- Send quarterly summaries to HMRC.
- Review and adjust the records at the end of the tax year.
- Submit the completed tax return using compatible software.
What are quarterly updates?
Quarterly updates are summaries of the income and expenses recorded in your software. They are not complete tax returns and do not normally require all year-end tax adjustments before submission.
A separate update may be needed for each self-employment or property business. For people using standard quarterly periods from April 2026, the first four deadlines are 7 August 2026, 7 November 2026, 7 February 2027 and 7 May 2027.
Does this mean paying Income Tax quarterly?
No. Quarterly updates do not, by themselves, change the normal Income Tax payment timetable. Your software may provide an estimate of the eventual tax liability, which can be useful for budgeting.
What happens at the end of the tax year?
After the final quarterly update, the records must be reviewed and adjusted where necessary. This can include correcting errors, removing non-allowable expenditure, claiming reliefs and allowances, adding other income and reporting capital gains where relevant.
How to prepare now
- Confirm whether and when the rules apply to you.
- Review the qualifying income shown on your relevant Self Assessment return.
- Select suitable compatible software.
- Bring your bookkeeping records up to date.
- Separate business and personal transactions.
- Create a regular process for recording invoices, receipts and expenses.
- Authorise your accountant to deal with HMRC where appropriate.
- Make a note of your first quarterly reporting deadline.
Could you qualify for an exemption?
HMRC may grant an exemption where it is not reasonable or practical for a person to use digital systems. Applications are considered based on the person’s individual circumstances.
How Charterlink can help
Charterlink Management Ltd can check whether the rules apply, review qualifying income, help select and set up software, organise digital records, prepare quarterly updates and complete the year-end tax return.
Ready for Making Tax Digital?
Avoid leaving the transition until the first submission deadline. Put the right records and software in place now.
Book Your Free ConsultationOfficial guidance: HMRC: Use Making Tax Digital for Income Tax and check when you need to use it.