Making Tax Digital for Income Tax: the plain-English guide

Before looking at software or filing dates, it helps to settle one important point: Making Tax Digital for Income Tax uses your gross income, not your profit. For a landlord, that means the rent you receive before the mortgage, letting agent and boiler repair costs are taken off. A landlord receiving £55,000 in rent is therefore in scope even if little profit remains after those costs. That distinction provides the context for the rest of the rules.

What MTD for Income Tax changes in day-to-day practice

Under Self Assessment, people with rental or self-employment income usually gathered their records into one annual return and filed it by 31 January. Making Tax Digital changes that rhythm by requiring four quarterly updates and a tax return, making five submissions for the tax year. You must send them through compatible software that connects to HMRC rather than typing the figures directly into the HMRC website.

The first phase began on 6 April 2026, so these rules now apply to the people included in that wave.

The threshold test starts with your qualifying income

To work out whether MTD applies, start by adding together your gross income from property and self-employment. The threshold is more than £50,000 now. It changes to more than £30,000 in April 2027 and more than £20,000 in April 2028. If you’re below the current threshold, you may therefore come into scope as it falls.

Only qualifying income belongs in that total. Rent from UK property and self-employment turnover both count, and HMRC combines them for the threshold test. Salary, dividends, pension income, savings interest and capital gains do not count. Income from property held inside a limited company is also outside this test because it is dealt with through corporation tax.

Entry into the April 2026 wave was based on the return filed by 31 January 2026 for the 2024/25 tax year. HMRC has written to people it believes are in scope, but the legal duty to check remains with you. If your income qualifies, the rules still apply even if no letter arrives. The Am I in MTD? calculator can add your figures and show which threshold applies.

MTD for Income Tax applies to individuals, including unincorporated landlords and sole traders. Limited companies file a Company Tax Return and remain outside MTD for Income Tax. Trusts, estates and some other role-based cases are automatically exempt. Someone who cannot reasonably use compatible software may also be able to apply to HMRC for a digital-exclusion exemption.

The quarterly updates are regular summaries, not a second tax return

Quarterly reporting can sound more involved than it is. Each update is a summary of your income and expenses by category for the tax year to date, rather than a second tax return. You do not make the full set of tax adjustments at this stage, and sending an update does not create a payment deadline. Your software or HMRC account may use the figures to show an estimate for the year.

The updates are cumulative, so each one restates the tax year to date rather than covering only the latest three months. Your second update, for example, covers April through September, not July through September. This also gives you a straightforward way to correct an earlier figure in the next update instead of carrying the error through the year.

You can use estimated figures at this stage as long as you correct them later. If a repair invoice has not arrived, you can include an estimate and update it in the following quarter. It is better to make that correction later than to miss the filing deadline while waiting for the final figure.

The standard tax-year quarters and filing dates are shown below. If you use calendar quarters instead, the deadlines calendar shows the alternative schedule.

After the four updates, you submit your tax return by 31 January 2028 using compatible software. This is where you confirm the full year, claim allowances, include income that was not part of the quarterly updates and settle your tax position. Although the reporting rhythm has changed, the payment deadlines have not: they remain 31 January and 31 July.

The first year is softer, but the filing habit still matters

Late submissions normally follow a points system. A late quarterly update adds one point, and reaching four points leads to a £200 penalty. For 2026/27, however, HMRC has introduced a soft landing and will not issue points for late quarterly updates in that first year.

That concession is limited to points for quarterly updates. It does not cover the tax return, which remains within the late-submission points system, and it does not suspend late-payment penalties or interest when tax is paid late. You still need to file the tax return and pay your bill on time. The full penalties breakdown explains the exact percentages and dates.

The software choice should follow the way your income works

Your software needs to fit both the MTD filing pattern and the way you keep records. HMRC doesn’t provide its own MTD software, so you can choose a commercial product from its recognised list or use bridging software with a spreadsheet you already maintain. If a spreadsheet suits you, you don’t need to move all your records into a new accounting app. A spreadsheet used with compatible bridging software is fully compliant.

The route that fits you depends on how many properties you have, whether you also trade and whether any property is jointly owned. The selector works through those details and narrows the available options around your circumstances.

The edge cases are where it is worth slowing down

These general rules do not apply in the same way to every arrangement. Because the details differ, the following situations are covered separately.

If you used to run a furnished holiday let, the regime ending in 2025 changed what your software needs to handle. The holiday-let guide explains how that change affects your records.

If some properties sit in a limited company and others are held in your own name, only the personally held side counts for MTD for Income Tax. The mixed-portfolio guide shows where that boundary falls.

Living abroad while receiving rent from a UK property brings its own rules, including a deferral that may apply. The non-resident guide sets out that position in more detail.

If you have both rental and freelance income, the two are added together for the threshold test even when each is below the threshold on its own. The property and self-employment guide explains how to combine them and keep the records separate.