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Making Tax Digital: VAT and Income Tax in 2026

Making Tax Digital means you keep your business records in software and send them to HMRC from that software. VAT-registered businesses have done this for VAT returns since 2019, and all of them since April 2022. From 6 April 2026 it covers Income Tax too: sole traders and landlords with qualifying income over £50,000 send four quarterly updates a year, then a tax return by 31 January. The threshold drops to £30,000 in April 2027 and £20,000 in April 2028.

Rules checked
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Who has to comply

Who it applies to, and who is left out.

Income Tax rules apply if you are registered for Self Assessment and your gross income from self-employment and property together passes the threshold: £50,000 in 2024 to 2025 for April 2026. HMRC checks your return each year and writes to you. You can apply for an exemption if you are digitally excluded, for example through disability, location or religious belief. Every VAT-registered business already follows the VAT rules.

Key dates

From the official sources below.
  1. Apr 2019Making Tax Digital for VAT starts for VAT-registered businesses with taxable turnover above the VAT threshold.
  2. Apr 2022It extends to every VAT-registered business, whatever its turnover.
  3. 6 Apr 2026Making Tax Digital for Income Tax starts for sole traders and landlords with qualifying income over £50,000 in 2024 to 2025.
  4. 7 Aug 2026First quarterly update deadline, for April to early July 2026.
  5. 6 Apr 2027The threshold drops to £30,000, based on 2025 to 2026 income.
  6. 6 Apr 2028The threshold drops to £20,000, based on 2026 to 2027 income.

Tools that support it

Each checked on the provider's own website.
FreeAgentSupported

HMRC-recognised: fills in your quarterly updates from your books and sends them and the final declaration to HMRC.

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XeroSupported

HMRC-recognised for VAT and Income Tax, and every plan is ready for Making Tax Digital.

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QuickBooksSupported

HMRC-recognised for VAT and Income Tax, with a Sole Trader plan for the self-employed.

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Sage AccountingSupported

Sage Accounting and Accounting Start send your four quarterly Income Tax updates straight to HMRC.

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Zoho BooksSupported

HMRC-recognised for Income Tax since August 2025, with VAT included on its free plan.

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FreshBooksPartly

HMRC-recognised for VAT returns; for Income Tax it gives you reports, not quarterly submissions.

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Questions

What people ask about Making Tax Digital.

Do I need MTD if I earn under £50,000?

Not yet, unless you sign up voluntarily. The threshold falls to £30,000 from 6 April 2027 and £20,000 from 6 April 2028, each based on your income two tax years earlier. The test uses gross income from self-employment and property, before expenses, not your profit. Under £20,000 you stay on the normal Self Assessment return.

When are the quarterly updates due?

By 7 August, 7 November, 7 February and 7 May, each covering the tax year so far. You send totals per income and expense category, not individual receipts. You still file a tax return and pay what you owe by 31 January. You can send updates early or more often if you like.

What happens if I miss a quarterly update?

For the 2026 to 2027 tax year HMRC does not give penalty points for late quarterly updates, but you must send them before your tax return. From April 2027 each missed deadline adds a point. Four points bring a £200 penalty. If you joined voluntarily, the penalty comes at two points.

Is there free software for Making Tax Digital?

Yes. HMRC says free products exist for simple tax affairs, often with limits such as a cap on transactions. HMRC lists every recognised product in its software finder, and it does not recommend one over another. Some accounting apps include free plans for sole traders with MTD built in.

I moved to the UK as a freelancer. Do my foreign earnings count?

The threshold counts self-employment and property income you report on your UK return. If you rent out a flat in your home country, that foreign property income can count too, so check your figures with HMRC's eligibility tool. Employment income and dividends do not count towards the threshold. An accountant can confirm how double taxation relief fits in.

Official sources

Where the rules and dates on this page come from.