What has changed for income tax
Making Tax Digital for Income Tax started on 6/4/2026. If you are caught by it, you can no longer keep your figures in a shoebox and hand them over once a year. Records have to be kept digitally, a short summary of income and expenses goes to HMRC every quarter, and the yearly tax return is filed through the same software.
For many people the bigger change is habit rather than tax. Receipts need recording through the year, not in a rush just before 31/1. Once that rhythm is in place, most clients find it easier to know where they stand.
A Making Tax Digital accountant can take most of that routine off you, or simply check your work before it goes to HMRC. Either way, the aim is the same: accurate records each quarter and no surprises when the yearly bill arrives.
When you have to join
HMRC decides using your qualifying income, which is your gross self employment turnover plus your gross property income. Profit does not matter. Neither do wages, pensions or dividends. HMRC looks at the tax return you filed for an earlier year to work out whether you are in.
A carpenter in Abbots Langley with £40,000 of turnover and a flat let for £14,000 a year has qualifying income of £54,000, even if the profit is much lower. Where property is owned jointly, each owner counts only their own share of the rent.
If your income sits close to a threshold, check the figures early. Turnover tends to creep up, and a landlord in Croxley Green who raises the rent on two flats can cross the £30,000 line without noticing.
- From 6/4/2026: qualifying income over £50,000
- From 6/4/2027: qualifying income over £30,000
- From 6/4/2028: qualifying income over £20,000
What is included
- Checking whether and when you must join
- Choosing compatible software or bridging software
- Setting up your records and bank feeds
- Quarterly updates sent to HMRC
- Your yearly tax return filed through MTD software
- Reminders before every deadline
- Help with exemption applications
Your quarterly deadlines
The tax year is split into four quarters. Each update is due about a month after the quarter ends. Quarterly updates are reports only. They do not create a tax bill, and your tax is still paid on the usual dates of 31/1 and 31/7.
- Quarter to 5/7: update due by 7/8
- Quarter to 5/10: update due by 7/11
- Quarter to 5/1: update due by 7/2
- Quarter to 5/4: update due by 7/5
Software, spreadsheets and the yearly return
You need software that HMRC lists as compatible with Making Tax Digital for Income Tax. Some people keep using a spreadsheet and link it to HMRC with bridging software, which is allowed. Others move to a full bookkeeping package that connects to their bank and photographs receipts.
After the fourth quarter, you make any final adjustments, add other income such as interest or a salary, and file a tax return through your MTD software. That return is still due by 31/1 after the end of the tax year. We help you choose software that suits the way you work, set it up properly and show you how to use it.
Digital records do not mean sending HMRC every receipt. Each quarterly update is a summary of income and expenses in broad categories. The detail stays in your records, and you keep it in case HMRC ever asks to see it.
Penalties in the first year
HMRC uses a points system. For 2026/27, it has said it will not give penalty points for late quarterly updates, which gives people time to settle in. A late tax return still earns a point. Once you reach 4 points, a £200 penalty follows, and further late submissions bring more.
This grace period does not cover the year after. From 2027/28, each missed quarterly update can earn a point, so it makes sense to get the routine working now while mistakes are cheap. With a Making Tax Digital accountant filing for you, keeping track of eight or more dates a year stops being your job.
If digital records are not practical for you
Some people can apply to HMRC for an exemption. This is meant for cases where using software is not reasonably practicable, for example because of age, disability or where you live. An exemption is not automatic, and HMRC needs to agree it. We can help you decide whether to apply. Being busy, or simply preferring paper, is not usually enough.
How our Making Tax Digital accountant service works
We start by checking your qualifying income and the year you join. Then we set up the software, connect your bank feeds where possible and agree who records what. Some clients in Rickmansworth and Hemel Hempstead prefer to do their own bookkeeping and let us review and submit each quarter. Others hand over everything.
As your Making Tax Digital accountant, we send reminders before each deadline, file the updates and prepare your yearly return. We are based in Watford and work with sole traders and landlords across Hertfordshire online. Fees are fixed and agreed before any work starts, after a free review of your records.
Who this suits
- Sole traders with turnover over £50,000
- Landlords with rental income over the threshold
- People with both a small business and rental property
- Self employed people preparing for the £30,000 or £20,000 thresholds
- Anyone moving from paper or spreadsheets to software
Common questions
My turnover is over £50,000 but my profit is much lower. Do I have to join?
Yes. Qualifying income is based on gross turnover and gross rent, not profit. If the total is over £50,000 on the return HMRC uses, you join from 6/4/2026.
I have a job and one rental flat. Does my salary count?
No. Wages, pensions and dividends are left out. Only gross self employment and property income count towards the threshold.
Will I have to pay tax every quarter?
No. Quarterly updates are summaries of income and expenses. Your tax is still paid by 31/1 and 31/7, including any payments on account.
Can I keep using my spreadsheet?
You can, as long as you use bridging software that links the spreadsheet to HMRC. Many people find a full bookkeeping package saves time, but it is not compulsory.
What replaces the old end of year step?
You file a tax return through your MTD software after the fourth quarter. It includes any adjustments and income from outside your business or property. The deadline is still 31/1.
I own a rental property jointly with my wife. Whose income counts?
Each of you counts your own share of the gross rent. If your share plus any self employment income is over the threshold, you need to join, even if your spouse does not.
What happens if I send a quarterly update late in 2026/27?
HMRC has said it will not give penalty points for late quarterly updates in 2026/27. A late tax return still earns a point. From the following year, late quarterly updates count too.
Does Making Tax Digital for Income Tax apply to my limited company?
No. It is for individuals with self employment or property income. A limited company pays corporation tax instead, although a VAT registered company already files VAT returns through MTD software.