Making Tax Digital, in plain English.
From April 2026, many sole traders have to keep digital records and send HMRC an update every three months. Here's who it affects, when, and what to do about it.
Last checked 5 November 2026 against GOV.UK. Rules can change, so check GOV.UK or ask your accountant before you act.
It depends on your turnover, not your profit.
Making Tax Digital for Income Tax applies to sole traders and landlords registered for Self Assessment. It starts in three steps, based on your qualifying income.
| Qualifying income over | In the tax year | You start |
|---|---|---|
| £50,000 | 2024 to 2025 | 6 April 2026 |
| £30,000 | 2025 to 2026 | 6 April 2027 |
| £20,000 | 2026 to 2027 | 6 April 2028 |
What counts
Your self-employment income and property income added together, before any expenses. That's your turnover, not your profit.
What doesn't count
Wages from a job (PAYE), your share of a partnership's profit, dividends from your own company, and pensions.
HMRC will write to you
HMRC checks your tax return and writes if you're over the line. No letter? You're still responsible for checking.
Little and often, instead of once a year.
Keep digital records
From your start date, your income and expenses are kept in software that works with Making Tax Digital, rather than on paper.
Send an update every 3 months
A quarterly update of your income and expenses goes to HMRC from that software. It's a summary, not a tax bill.
Finish the year
Your tax return for the year is sent from the same software by 31 January, as now.
Quarterly update deadlines
For those starting in April 2026, the first update was due 7 August 2026, and the 2026 to 2027 tax return is due by 31 January 2028.
A soft first year, then points.
First year: no points for late updates
For 2026 to 2027, late quarterly updates don't get penalty points. Late payment penalties are also waived for up to 30 days, though interest still runs.
Still due on time
Digital records and quarterly updates are still required, and a late tax return is still penalised.
From 2027 to 2028: points
Each late update earns a point. Reach four and there's a £200 penalty, then £200 for each late one after that.
It hasn't been confirmed whether the soft first year will also apply to people starting in 2027 or 2028.
Fixiqo isn't MTD software. It keeps you ready for it.
Fixiqo doesn't send anything to HMRC. What it does is keep every invoice, credit note and receipt digital from day one, with net and VAT on each, so nothing is sitting in a carrier bag when an update is due.
One download gives you or your accountant a file for Xero, QuickBooks or FreeAgent, ready to go into the software that sends your updates. How the accounts side works
Making Tax Digital questions
Does Making Tax Digital change how much tax I pay?
No. It changes how you keep records and report to HMRC, not how your tax is worked out.
I have a limited company. Does this apply?
Making Tax Digital for Income Tax is for sole traders and landlords. A company's own tax works differently, but your personal tax return may still apply to you, so check with your accountant.
I'm VAT registered. Isn't this already happening?
Making Tax Digital for VAT already applies to VAT-registered businesses. This is the Income Tax version, which is separate.
I'm in a partnership. When do I start?
Partnerships will join later. HMRC hasn't set a date yet.
Can I be exempt?
Some people can, for example if you're digitally excluded. Some exemptions are automatic and others you apply for. You still send a Self Assessment return.