There are now only a few weeks left until the first deadline for Making Tax Digital for Income Tax arrives on 7 August 2026.
Those affected should, by now, understand their obligations. However, there are still thousands of taxpayers who are yet to register, according to HMRC.
What are the rules for MTD for Income Tax?
The latest phase of MTD requires taxpayers to keep digital records and use compliant software.
From April 2026, you should have been collecting digital records of your income and expenses to be submitted using MTD compliant software or a bridging solution by the upcoming August deadline.
You must submit these updates quarterly to HMRC, plus a final end-of-year tax return.
Sole traders and landlords who had a gross income of more than £50,000 from either rental or self-employment income in 2024/25 are obligated to comply with MTD in 2026.
If you have a gross qualifying income of over £50,000 from either rental or self-employment income, you are obligated to comply with MTD in 2026.
These qualifying rates for MTD will fall to £30,000 in April 2027 and then fall again to £20,000 in April 2028. So, it is important that all taxpayers affected take action now.
How can I prepare for the upcoming deadline?
To prepare for MTD, eligible sole traders and landlords need to move from paper records to fully digital records, recording and submitting information through HMRC-recognised software.
If you currently use spreadsheets, you will need a bridging solution to connect them to HMRC’s system.
Start by working out your gross qualifying income to check whether you need to comply with the rules.
If you are over the threshold, you must register for the MTD service with HMRC using your Government Gateway user ID and password.
Choosing the right software matters. It needs to be MTD-compliant so your tax documents reach HMRC correctly. If your software is not compliant, your documents may not be processed.
Good bookkeeping habits will also make the regular declarations easier to manage.
Will I be penalised if I miss the first MTD deadline?
In the first year, HMRC has agreed to a ‘soft landing’ period for MTD, which means that a late submission will not result in any penalty points for any missed quarterly updates in the first year.
While this may be welcome by many getting to grips with MTD, it is important to remember that you are still legally required to maintain digital records and make the submissions on time.
Missing deadlines can cause unnecessary stress and put you behind when the end-of-year declaration is due.
How we can help
If you have not already, you should consider appointing an accountant to support you with the changes to MTD.
Our expert team can help you stay compliant while handling all of the new obligations.
Get in touch today for advice on managing MTD before the deadline hits.
