Making Tax Digital for Income Tax: The First Deadline Has Passed, Here’s What Happens Now

Making Tax Digital for Income Tax went live on 6 April 2026 for the first wave of taxpayers, and 5 August came and went a couple of days ago. If you’re in that first wave and you got your first quarterly update in, well done, one down, three to go. If you didn’t, take a breath: HMRC has confirmed a “soft landing” on penalty points for the first four updates in this initial year, so a missed or late first submission isn’t the disaster it might feel like. But it’s not something to let slide either, because the next deadline, 5 November, is only around the corner.

More importantly, if you weren’t caught by MTD this April, don’t assume this doesn’t concern you. The threshold drops to £30,000 from April 2027, which pulls in a far larger group of sole traders and landlords than the first wave did. If that’s you, now, while there’s no deadline pressure at all, is genuinely the best time to get ahead of it. We’d rather talk you through this in a calm conversation in August than a panicked one next March.

What is Making Tax Digital for Income Tax?

MTD for Income Tax (often still called MTD ITSA) replaces the old once-a-year Self-Assessment tax return with a rolling, quarterly system. Instead of gathering everything up in January and hoping for the best, you now keep digital records throughout the year and send HMRC a summary every three months, followed by a Final Declaration at year-end that pulls everything together- allowances, reliefs and all- in place of the old SA100 form.

Think of it less as a new tax and more as a new routine. The tax you owe stays the same, but how and when you report it to HMRC changes.

Will it affect me?

It depends on your gross income, before expenses, not your profit. That distinction catches a lot of people out.

• Combined self-employment and/or property income over £50,000 in 2024/25 → you’re already in MTD, from 6 April 2026.
• Over £30,000 in 2025/26 → you’re in from 6 April 2027. This is the wave most small business owners and landlords reading this will fall into, and it’s the one to start preparing for now.
• Over £20,000 in 2026/27 → you’re in from 6 April 2028.

A couple of things worth flagging, especially for that 2027 group. First, it’s gross income that counts, not take-home. We’ve had clients assume they were safe because their profit after expenses was modest, only to find their turnover pushed them over the threshold. Second, self-employment and property income are added together. A landlord earning £18,000 in rent who also does £15,000 in freelance work on the side has £33,000 of qualifying income between the two, exceeding the £30,000 threshold, even though neither source alone would trigger it. Savings interest, dividends, pension income and PAYE wages don’t count towards the threshold, so they won’t tip you over on their own.

If you’re not sure which bracket you’ll fall into for 2027, or whether the rules apply to you at all, this is exactly the kind of thing worth a five-minute conversation with us rather than a guess. Working it out now, while there’s no deadline pressure, is far easier than working it out in a hurry next spring.

 

What do I have to do?

Three things, on repeat, four times a year:

1. Keep digital records. Spreadsheets on their own generally won’t cut it unless they’re linked to HMRC-recognised bridging software. Most clients find it far less hassle to move to proper cloud accounting software, which does the heavy lifting automatically.
2. Submit a quarterly update. A running total of income and expenses for the period, submitted within a month of the quarter ending. For anyone using standard tax-year quarters, the deadlines are 5 August, 5 November, 5 February, and 5 May.
3. File a Final Declaration. This replaces the old tax return and is where allowances, reliefs and your overall tax position get confirmed for the year.

The good news is that quarterly updates are cumulative rather than final; if a figure needs correcting, the next update simply overwrites it, so there’s some breathing room to fix mistakes before the year-end declaration locks things in. That flexibility, plus the soft landing on penalties, means a shaky first quarter isn’t something to panic over. But it’s worth spending the next few months getting the process running smoothly, because the grace period won’t last forever, and 2027 will bring far more people into the system at once.

 

What’s next?

If you’re already in MTD from this April, the priority now is simple: don’t let 5 November sneak up the way 5 August might have. Whatever tripped you up first time, whether it was pulling the figures together, understanding what counts as qualifying income, or just not realising the deadline had moved, sort it before the next quarter closes.

If you’re in the £30,000-plus bracket joining from April 2027, this is the best opportunity to prepare. Choose and set up your software, move your records from spreadsheets or shoeboxes to a digital format, and build the habit before it becomes compulsory. Businesses that lay this groundwork over the summer tend to transition smoothly, while those who wait until March 2027 often find themselves in a panic.

As always, this is exactly the sort of change we like to walk clients through properly rather than leave them to work out from a government web page at 11 pm. If you’d like us to check which phase applies to you, get your records set up on the right software, or simply take the quarterly filing off your plate entirely, get in touch with the team in Salisbury or Southampton.

And if this is the kind of thing you find useful, have a browse through our other blogs; we cover the tax changes, deadlines and quirks of running a small to medium-sized business that actually affect people like you, not just the headline Budget numbers.