Making Tax Digital (MTD) for Income Tax became mandatory from 6 April 2026 for many sole traders and landlords whose qualifying income exceeded £50,000.
The first quarterly update deadline (7 August 2026) has now passed, providing the first real experience of the new system for affected taxpayers and their advisers. HMRC has reported that more than 436,000 sole traders and landlords successfully submitted their first quarterly update under MTD for Income Tax.
One important lesson is that MTD is about more than sending information to HMRC four times a year. The underlying requirement is to maintain digital records using compatible software.
The quarterly updates are based on information held in those digital records. They provide HMRC with summaries of income and expenses rather than being complete tax returns containing every year-end accounting and tax adjustment.
For many taxpayers, the biggest change is therefore not the quarterly submission itself, but the need to keep accounting records reasonably up to date throughout the year.
If you are within MTD, now is a good time to review how the first quarter went. Were records complete? Were business and personal transactions properly separated? Were invoices and expenses recorded promptly? Did your software operate as expected?
Any problems identified during the first submission should be addressed now rather than repeated for the remaining quarters.
The next quarterly update for taxpayers following the standard tax-year quarters covers the period to 5 October 2026 and is due by 7 November 2026.
HMRC has said that taxpayers will not receive penalty points for submitting quarterly updates late during the 2026-27 tax year. This easement should not, however, be regarded as a reason to ignore the deadlines. Keeping submissions up to date will make the year-end process much easier.
The scope of MTD expands further from April 2027 to include many sole traders and landlords with qualifying income over £30,000, with a further extension planned from April 2028.
Those joining next year should use the experience of the first group to prepare well in advance.
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Published by The NAS News Team
