Making Tax Digital for ITSA 2026
MTD for Income Tax is mandatory from 6 April 2026 for sole traders and landlords with qualifying income over £50,000. Thresholds, deadlines and penalties.
From 6 April 2026, HMRC's Making Tax Digital for Income Tax (MTD ITSA) is mandatory for sole traders and landlords whose qualifying income was over £50,000 in the 2024 to 2025 tax year. Qualifying income is gross self-employment and property income before expenses (turnover), not profit. Those affected keep digital records, send quarterly updates, and file their tax return through compatible software.
MTD ITSA rollout timeline
| Effective | Qualifying income over | Tax year HMRC checks |
|---|---|---|
| 6 April 2026 | £50,000 | 2024 to 2025 |
| 6 April 2027 | £30,000 | 2025 to 2026 |
| 6 April 2028 | £20,000 | 2026 to 2027 |
Partnerships will also have to join; HMRC says it will set out the timeline later. People who are exempt, for example because they are digitally excluded, carry on with a normal Self Assessment return. Once you are in, you can choose to leave only if your qualifying income stays below the threshold for 3 tax years in a row.
Quarterly update deadlines
Each quarterly update is a running total from the start of the tax year, sent for each self-employment and property business. The table shows the standard update periods; if your accounts run 1 April to 31 March you can choose calendar update periods instead, with the same deadlines.
| Update | Standard period covered | Deadline |
|---|---|---|
| 1 | 6 April - 5 July | 7 August |
| 2 | 6 April - 5 October | 7 November |
| 3 | 6 April - 5 January | 7 February |
| 4 | 6 April - 5 April | 7 May (following tax year) |
| Tax return | Tax year | 31 January following the tax year (same as now) |
Penalty regime
New penalties replace the current Self Assessment late filing and late payment penalties from the tax year you join. The older penalties still apply to earlier years: if you joined on 6 April 2026, your 2025 to 2026 return due 31 January 2027 is under the current rules.
- No penalties for missing a quarterly update deadline in 2026 to 2027 (updates are still required before you can file the return).
- One point per missed tax return deadline (the 2026 to 2027 return included), and from 2027 to 2028 per missed quarterly update; at 4 points a £200 penalty, then £200 for each further missed deadline.
- Below 4 points, each point expires 24 months after the missed deadline. At 4 points, all points are removed after 12 months of on-time submissions, once anything outstanding from the previous 24 months has been sent.
- Late payment, 2026 to 2027: no penalty up to 15 days late; 3% of the tax owed at day 15 and another 3% at day 30, plus 10% a year from day 31. In your first year the penalty only starts after 30 days. For 2027 to 2028 the two charges rise to 4%.
- Late payment interest still runs from the first day late at Bank Rate plus 4 percentage points.
Related
Frequently asked questions
When does MTD ITSA become mandatory?
From 6 April 2026 for sole traders and landlords whose qualifying income was over £50,000 in the 2024 to 2025 tax year; from 6 April 2027 if it was over £30,000 in 2025 to 2026; and from 6 April 2028 if it is over £20,000 in 2026 to 2027. HMRC says it will set out the timeline for partnerships later.
Who is in scope from April 2026?
Sole traders and landlords registered for Self Assessment whose qualifying income in 2024 to 2025 was over £50,000. Qualifying income is gross self-employment plus property income, before expenses. Employment pay, a partnership profit share, dividends and pensions do not count towards it, so a PAYE employee or company director is only in scope through self-employment or property income of their own.
What does MTD ITSA actually require?
Digital records kept in compatible software, a quarterly update for each self-employment and property business by 7 August, 7 November, 7 February and 7 May, and a tax return submitted through the software by 31 January after the tax year. Quarterly updates are running totals from the start of the tax year, not tax returns.
Can I keep using a spreadsheet?
Yes, if you pair it with bridging software that is compatible with Making Tax Digital for Income Tax. HMRC says records must be digitally linked between products, for example with linked cells, file import or export, or an API transfer - copying figures across by hand does not count.
What happens if I miss a quarterly submission?
HMRC says there are no penalties for missing a quarterly update deadline in the 2026 to 2027 tax year, but you still have to send the updates before you can submit your tax return. A missed tax return deadline earns a penalty point - including the 2026 to 2027 return due 31 January 2028 - and from 2027 to 2028 each missed quarterly update does too; at 4 points you get a £200 penalty, and another £200 for each further missed deadline.
How do I prepare?
Check whether and when you need to start using HMRC's online tool, choose software from HMRC's list of compatible products, sign up, and keep digital records from the start of the tax year you join. You still file a normal Self Assessment return for the tax year before you start.