Who has to use MTD for Income Tax
Making Tax Digital for Income Tax started on 6 April 2026. Sole traders and landlords whose qualifying income — gross self-employment and property income, before expenses — was over £50,000 on their 2024/25 return must keep digital records, use compatible software and send HMRC quarterly updates. The threshold falls to £30,000 from April 2027 and £20,000 from April 2028.
HMRC began writing to people it expects to be in scope in 2026. If you are over the threshold and have not heard, check the GOV.UK guidance rather than waiting.
Quarterly update deadlines for 2026/27
| Update | Covers (cumulative) | Due by |
|---|---|---|
| Quarter 1 | 6 April – 5 July 2026 | 7 August 2026 |
| Quarter 2 | 6 April – 5 October 2026 | 7 November 2026 |
| Quarter 3 | 6 April 2026 – 5 January 2027 | 7 February 2027 |
| Quarter 4 | 6 April 2026 – 5 April 2027 | 7 May 2027 |
| Final declaration | The whole year | 31 January 2028 |
Each update is cumulative: it covers the tax year from 6 April to the end of the quarter, so corrections to earlier quarters simply flow into the next one. The second update, due 7 November 2026, covers 6 April to 5 October, and most people can send it from 6 October. You can choose calendar quarters (ending 30 June, 30 September and so on) instead, if your software supports it.
Penalties in the first year
For the 2026/27 tax year, HMRC does not give penalty points for late quarterly updates. The updates are still required before the final declaration, and the usual penalties for a late return, late payment and interest all still apply. From 2027/28, each late update earns a point, and reaching the threshold brings a £200 penalty.
How much to set aside each quarter
After each update, your software shows HMRC’s estimate of the tax on the year so far. That estimate is the most useful number MTD gives a sole trader: it is the reserve you should already be holding.
A sole trader in England expecting £60,000 of profit in 2026/27
| 2026/27 | Amount |
|---|---|
| Income tax: £37,700 at 20% + £9,730 at 40% | £11,432.00 |
| Class 4 NI: £37,700 at 6% + £9,730 at 2% | £2,456.60 |
| Total for the year | £13,888.60 |
That is 23.1% of profit, about £3,472 a quarter. If the 7 November update shows £28,000 of profit from 6 April to 5 October, a reserve on track holds about 23.1% of that: £6,481.
Once profit passes £50,270, every further pound needs 42p set aside, not the average 23p. The quarterly estimate shows when you cross that line.
What quarterly updates do not change
- When you pay. Payments on account on 31 January and 31 July, and the balancing payment, are unchanged. Quarterly updates are reports, not payments.
- The first-year cash shock. The January payment can still be 150% of a year’s tax; see how much to save for Self Assessment.
- Other income. Salary, dividends and savings are not in quarterly updates but are in the final declaration.
- The Autumn Budget on 28 October 2026 may change rates or thresholds for later years; the figures above are for 2026/27.
- Scotland has its own income tax bands.
CashDesk keeps a running UK tax reserve, income tax and Class 4 National Insurance with payments on account, from your imported statements. It prepares figures; it does not submit anything to HMRC and is not MTD-recognised software.