Making Tax Digital for Income Tax is no longer coming — it arrived. Since 6 April 2026, sole traders and landlords with gross income over £50,000 must keep digital records and send HMRC quarterly updates through software, with the first quarterly deadline (7 August) already behind us. Over half a million people have signed up, a large minority left it dangerously late, and from this September HMRC has started automatically enrolling the mandated stragglers. If your turnover is anywhere near the thresholds, here is exactly where things stand and what the next two years bring.
Who is in — and the two waves behind you
The test is qualifying income: gross income — turnover before any expenses — from self-employment and property combined. A plumber with £40,000 of sales and £15,000 of rent is over the line at £55,000, whatever the profits. The current wave (over £50,000, measured from 2024/25 returns) was roughly 800,000 people. The next waves are fixed: over £30,000 from April 2027, and over £20,000 from April 2028 — each measured from the tax return two years prior, which means your 2025/26 return, being filed this January, decides whether you are in the 2027 wave. Landlords are hit exactly as traders are; "I'm just a landlord" is not an exemption, it is the second-largest category.
Genuine exemptions exist: the digitally excluded can apply (age, disability, no usable internet, religious grounds), and some groups sit outside or deferred — trusts, personal representatives, ministers of religion, foster carers using qualifying care relief. Everyone else is in when their number comes up.
What you actually have to do
- Digital records — income and expenses kept in MTD-compatible software (the major bookkeeping platforms all qualify; free products exist for simple affairs). A shoebox transcribed quarterly by someone into software also works — that someone can be your accountant;
- Four quarterly updates — due 7 August, 7 November, 7 February and 7 May. Helpfully, they are cumulative: each covers the year so far, so an error in Q1 simply corrects itself in Q2 rather than requiring an amendment. The updates are raw totals, not tax calculations — no accounting adjustments needed in-year;
- A year-end final declaration through the software, replacing the self assessment return, still due 31 January with the tax payment dates unchanged.
The workload shift is real but smaller than feared for anyone whose records were already in an app; it is transformative (in the unwelcome sense) for the January-shoebox tradition, which simply does not survive quarterly deadlines.
Penalties: a soft first year, then points
MTD brings the points regime: one point per missed submission, a £200 penalty at four points, and £200 for each miss thereafter, with points expiring only after sustained compliance. HMRC has granted a first-year easement — no points for late quarterly updates in 2026/27 — but the updates must still be filed before the year-end return can go in, so "skip the quarters, file in January" is not actually available. Late payment is where the regime bites hardest now: 3% of unpaid tax at day 15, another 3% at day 30, then 10% a year accruing daily. The days of cheap January drift are over.
What the first five months have shown
The launch pattern was predictable: a trickle of early sign-ups, a rush at the deadline, and about three-quarters of the mandated population enrolled by August, with over 400,000 first quarterly updates filed on time. The friction points so far are worth knowing: jointly-owned property (an easement lets joint owners omit expenses from in-year updates), business cessations mid-year, and taxpayers with multiple agents. HMRC's move to automatic sign-up from September 2026 resolves the enrolment gap by force — but an automatic enrolment with no software behind it just converts an unenrolled taxpayer into a non-filing one, which is why acting before HMRC acts for you matters.
Getting ahead of your wave
For the already-mandated: if you have not filed the August update, move now — the year-end declaration depends on it, and the easement will not last. For the 2027 wave (£30,000+): the return you file this January determines your status, and the smart sequence is software running from April 2026 data anyway, so mandation becomes a non-event. For everyone: quarterly visibility of profits is the silver lining worth actually using — tax bills stop being January surprises, and payments on account can be managed against real numbers.
Acumon runs MTD end to end — software setup, quarterly filing, the final declaration — through our Making Tax Digital service, with bookkeeping for those who want the whole quarterly cycle taken off their hands, and our sole trader and landlord teams handling the sector specifics. If your gross income is over £30,000, the sensible year to sort this was last year; the second-best is now.