Making Tax Digital for Income Tax 2026/27: Rules, Deadlines and Next Steps

Who must use MTD for Income Tax?

MTD for Income Tax changes how affected individuals keep and report their business records. The test uses gross qualifying income from self-employment and property, before expenses. Add qualifying sources together; a small profit does not by itself keep you outside the rules. Employment income and dividends do not form part of this qualifying-income threshold.

For example, £35,000 of self-employment turnover plus £18,000 of qualifying property income totals £53,000. If those figures were on your 2024/25 return, you may need to use MTD from 6 April 2026 even though neither activity individually exceeds £50,000. Joint property owners assess their own share, rather than the property's entire rent. See HMRC's scope and qualifying-income guidance.

These are entry thresholds for the relevant years, rather than a requirement to join immediately whenever this month's turnover rises. Partnerships are outside the present individual rollout; do not assume an unconfirmed partnership start date. Exemptions and eligibility conditions also matter. Check your actual return and HMRC position before deciding that you are in or out.

Digital records and compatible software

Affected businesses must keep the required income and expense information digitally and use compatible software to submit it. That does not necessarily mean replacing every existing spreadsheet. A spreadsheet can form part of a compatible arrangement with bridging software and the required digital links. Paper invoices and receipts can still be retained as evidence, but they do not replace the required digital business records.

Choose software that supports your circumstances, including property income, multiple trades, joint ownership and the annual return where relevant. A product's VAT capability is not proof that its particular subscription supports MTD for Income Tax. Check the exact product against HMRC's software finder and confirm which functions are included before paying for it.

Quarterly deadlines for 2026/27

Updates are cumulative summaries from the beginning of the tax year. They are required for each self-employment business and each relevant property business. The standard periods and deadlines below follow HMRC's quarterly update guidance.

Calendar update periods can use 1 April to the relevant quarter end, with the same submission deadlines. As at 11 October 2026, the first update deadline has passed. If you missed it, organise the records and submit the outstanding update; then prepare the cumulative second update due on 7 November.

The annual return and tax payments still matter

Quarterly updates do not complete your annual tax affairs. After the year ends, make the required accounting and tax adjustments, include other income and claim relevant reliefs through the annual tax return process. For 2026/27, that return is due by 31 January 2028. Your 2025/26 Self Assessment return has separate usual deadlines: 31 October 2026 for paper returns and 31 January 2027 for online returns. Check HMRC’s filing guidance and our Self Assessment service for the annual return work.

MTD does not create a general obligation to pay Income Tax every quarter. Existing payment dates and payments on account continue to apply where relevant. Keep a cash reserve based on the expected full-year liability, rather than treating an early software estimate as the final bill.

Exemptions and first-year penalties

If digital record keeping is not reasonably practicable because of disability, age, remoteness or another accepted reason, an exemption may be available. Apply through HMRC's process rather than simply stopping submissions. Separate exclusions apply in particular circumstances; your accountant should check these against the current guidance.

HMRC will not apply penalty points for late quarterly updates for 2026/27. This is a specific first-year measure, not a general exemption from keeping records, filing the annual return or paying tax. Other obligations, interest and applicable payment penalties remain relevant. Read HMRC's MTD penalty guidance for the current distinction between quarterly updates, tax returns and late payments.

A practical October 2026 action plan

1. Check the qualifying income on the appropriate reference return and confirm any exemption.
2. Confirm enrolment, software access and who is responsible for submitting each business update.
3. Reconcile bank transactions, invoices and expense categories from April onwards, including missing records.
4. Check whether the August update was submitted successfully and prepare the November cumulative update.
5. Keep the 2025/26 annual return and payment deadlines in your diary alongside the new quarterly rhythm.

Agree the service scope with your adviser: bookkeeping, software fees, update submissions and the annual return may be separate elements. Regular reconciliation makes the figures more useful for business decisions and reduces the amount of correction needed at year end.

Frequently asked questions

Does the MTD threshold mean profit or turnover?

It uses qualifying gross income from self-employment and property before expenses, combined across qualifying sources. Profit alone does not determine whether you must join.

When is the next 2026/27 quarterly update due?

The second quarterly update is due on 7 November 2026. Standard periods are cumulative from 6 April 2026 to 5 October 2026.

Do quarterly updates replace the annual tax return?

No. Affected taxpayers must also complete an annual tax return through compatible software. The 2026/27 annual return is due by 31 January 2028.

Reviewed against the linked primary sources on 11 October 2026. This guide gives general information; the tax treatment depends on your circumstances and the relevant tax or accounting period.

For support with your records and calculations, see our tax returns service or contact Angel Accountancy to discuss your requirements.