The rollout of ‘Making Tax Digital’ (MTD) has been a long and well-documented process. But for the first group of self-employed taxpayers, the first submission deadline looms. 7th August 2026 is the deadline for the first quarterly summary submission for those now implicated – and that’s only a matter of days away!
If you’re still unsure of what’s required of whom, and by when – this article is for you. Informed by our team, here’s all you need to know about MTD and what’s required – for the short and longer term.
A quick recap: what is MTD for Income Tax?
Making Tax Digital for Income Tax replaces the single annual Self-assessment return with a more frequent, digital way of reporting. In practice, that means three things: keeping your records digitally, sending HMRC a quarterly summary of your income and expenses, and completing a final declaration after the tax year ends to confirm the full picture.
Who is implicated right now?
The first phase went live in April 2026. You now must be registered and use MTD if you’re a sole trader or landlord whose qualifying income was over £50,000, based on your 2024/25 Self-assessment return. HMRC has been writing to those affected – but don’t wait for a letter; the responsibility sits with you, to check if you’re eligible.
The most important phrase here is “qualifying income” – and it’s worth defining, as it’s been a major point of confusion for some. It means your gross income (turnover before you’ve deducted a single expense) added together across self-employment and property if you have both. So, a landlord with £35,000 of rent and a small side trade bringing in £20,000 is over the line at £55,000, even if the profit left after costs feels far more modest. An easy mistake to make – but an important one to get right.
The first quarter has now closed (6 April to 5 July, or 1 April to 30 June if you’ve opted for calendar quarters), which brings us neatly to the date on everyone’s mind.
What to do if you’re eligible
The first quarterly update is due by 7th August 2026. If that’s you, here’s your checklist:
- Confirm you’re actually in scope. Check your 2024/25 qualifying income – gross and combined – across self-employment and property. If you’re close to the threshold, it’s worth a proper look rather than a guess.
- Make sure you’ve signed up with HMRC for MTD. This isn’t automatic. You need to sign up through HMRC’s service before you can submit anything.
- Check your record-keeping is MTD-compatible. That means either MTD-compatible software such as Xero, or spreadsheets linked to bridging software. Copying and pasting figures between systems won’t meet the requirement.
- Get your first quarter’s records straight and submit by 7th August. The update is a summary of income and expenses, not a full return.
- Diary the rest of the year. The remaining updates are due 7th November 2026, 7th February 2027 and 7th May 2027, followed by your final declaration by 31st January 2028.
What penalties might you face?
A reassuring word on penalties. HMRC has confirmed a “soft landing” for 2026/27 – that means no penalties will be issued for quarterly updates filed late in this first year. That’s a sensible bit of breathing room while everyone finds their feet. But two caveats to note: it doesn’t remove the obligation to file (you still need all four updates in before you can submit your return), and it doesn’t cover late payment of tax, where the usual consequences apply from day one.
Beyond this year, late submissions work on a points system: reach four points and there’s a £200 penalty. In short, the soft landing is a buffer for genuine teething problems, not a reason to leave it all to the last minute.
Next steps – the phased rollout
MTD for Income Tax is being phased in over three years, and the threshold drops each time to include more people:
- From April 2026, sole traders whose qualifying income was over £50,000 are now included.
- From April 2027, it extends to those with qualifying income over £30,000.
- From April 2028, it drops again to qualifying income over £20,000 -bringing an estimated 970,000 more sole traders and landlords into the regime.
Getting ahead of it
If your qualifying income sits below £50,000 today, you don’t need to do anything this August. But there’s a strong case for not waiting until the mandate lands on your doormat. Instead, get ahead by considering the following:
- Work out roughly where you sit. If your qualifying income is nudging the £30,000 or £20,000 marks, you’ll likely be brought in at the 2027 or 2028 stage. Acknowledging that means it won’t come as a surprise.
- Start keeping digital records anyway. Building the habit while there’s no deadline attached makes the eventual switch far smoother and gives you a clearer view of your own numbers in the meantime.
- Have the software conversation early. Choosing the right tool is easier when you’re not under pressure.
- If still unsure – talk it through with a professional. We run Xero training sessions and MTD phone-in sessions throughout the year – you can find the next dates on our events page.
The long and short of it is – Making Tax Digital for Income Tax is no longer a distant ask – it’s live for the first group now, with two further phases already confirmed. If you’re in that first wave, your first quarterly update is due by 7 August 2026. If you’re not, the smart move is to get your records in shape before you’re required to.
Whether you’re filing your first quarterly update this week or want to get ahead of the 2027 and 2028 changes, we can help you plan the transition properly.
Get in touch with the team – we’re here if you need us.