In this guide
If you are a sole trader or landlord, your 2025/26 tax return decides whether Making Tax Digital (MTD) for Income Tax applies to you from 6 April 2027. The test is turnover, not profit, and the return that settles it is due by 31 January 2027.
This guide shows how to check whether you are in the April 2027 group, what happens and when, and what to set up before your first quarterly update.
Check whether you are in the April 2027 group
HMRC looks at your qualifying income: your total income from self-employment and property, before expenses. It takes the figure from an earlier Self Assessment return.
| Self Assessment return | Qualifying income | MTD starts |
|---|---|---|
| 2024/25 | More than £50,000 | 6 April 2026 |
| 2025/26 | More than £30,000 | 6 April 2027 |
| 2026/27 | More than £20,000 | 6 April 2028 |
Add your trading turnover and your rents together. A landlord with £18,000 of rent who also earns £14,000 from freelance work has qualifying income of £32,000, so MTD would start in April 2027 even though the profit from each is much lower.
Some income does not count:
- salary taxed through PAYE
- dividends, including from your own company
- your share of a partnership's profit
- State Pension and private pensions
If you own a property jointly, only your share of the rent counts. A £40,000 rent split equally between two owners gives each of them £20,000. If you started trading part-way through the year, HMRC scales the income up to a full year.
HMRC writes to people it identifies from their return. If no letter arrives, you are still responsible for checking. Some people are exempt, for example if they cannot use digital tools; that needs an application to HMRC.
What happens and when
For someone in the April 2027 group using standard quarters:
| Date | What to do |
|---|---|
| By 31 January 2027 | File your 2025/26 return. HMRC uses it to test the £30,000 threshold. |
| February to March 2027 | Choose MTD-compatible software and sign up through HMRC. |
| 6 April 2027 | Start keeping digital records of income and expenses. |
| 7 August 2027 | First quarterly update (6 April to 5 July). |
| 7 November 2027 | Second quarterly update. |
| 31 January 2028 | Your 2026/27 return, filed the usual way. |
| 7 February and 7 May 2028 | Third and fourth quarterly updates. |
| 31 January 2029 | Final declaration for 2027/28 through your software. |
You can choose calendar quarters ending 30 June, 30 September, 31 December and 31 March instead. The update deadlines are the same.
A quarterly update is a running total of your income and expenses for the tax year so far, by category, sent from your software. You send one even if nothing happened in the quarter. It is a summary, not a tax return or a tax bill. Your payment dates do not change: the balancing payment and any payments on account are still due on 31 January and 31 July.
Get your records ready now
The work is easier if the records are already in order when MTD starts.
- Separate the money. A business bank account for trading or letting makes the records quicker to keep and to check.
- Pick your software early. HMRC lists compatible products. Check that the one you choose handles self-employment and property income if you have both, and links to your bank.
- Record as you go. Each sale, rent receipt and expense needs a digital record. Monthly is easier than catching up four times a year.
- Keep the receipts. Digital records do not replace the evidence behind them.
- Run a trial quarter. Enter January to March 2027 in the software before the real first quarter. It shows what is missing while there is still time to fix it.
Penalties from your first MTD year
HMRC uses penalty points. Each missed quarterly update or return deadline adds a point. At four points there is a £200 penalty, and a further £200 for each later missed deadline.
Points for late quarterly updates do not apply in the 2026/27 tax year, but someone starting in April 2027 is joining after that. Their quarterly updates for 2027/28 count from the start.
Late payment penalties change when you join MTD. In your first year, a penalty starts 30 days after the due date rather than 15. Interest runs on top.
Where to start
Use our Self Assessment records checklist to get the 2025/26 return ready. If you would like someone to set up the software and send the quarterly updates for you, see Self Assessment or Bookkeeping and VAT Returns.
Sources
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