Making Tax Digital
Making Tax Digital for Income Tax
From April 2026, sole traders and landlords with qualifying income above the threshold must keep digital records, submit quarterly updates to HMRC, and complete a Final Declaration at the end of every tax year.
- £50,000 from April 2026
- £30,000 from April 2027
- £20,000 from April 2028
The thresholds
When MTD applies to you
The threshold comes down in three steps. Whether you're in depends on the gross income on your Self Assessment return from two tax years earlier.
-
From April 2026In force now
Income over £50,000
Based on your 2024/25 Self Assessment return
-
From April 2027
Income over £30,000
Based on your 2025/26 Self Assessment return
-
From April 2028
Income over £20,000
Based on your 2026/27 Self Assessment return
Who it applies to
Who needs to comply with MTD for Income Tax
- Self-employed individuals (sole traders)
- Landlords
- Individuals with combined self-employment and rental income above the thresholds
What is qualifying income?
Your gross (combined) turnover from self-employment and/or rental income.
It's turnover before expenses, not profit. Income from both sources is added together.
Deadlines and reporting periods
Four quarterly updates, same four deadlines
Quarterly updates must be submitted to HMRC using HMRC-recognised software. Depending on whether your accounting period ends on 31 March or 5 April, different reporting period end dates may be used. The filing deadlines are the same whichever you choose.
| Quarter | Calendar reporting period | Standard reporting period | Deadline |
|---|---|---|---|
| Q1 | 01/04 – 30/06 | 06/04 – 05/07 | 7 August |
| Q2 | 01/04 – 30/09 | 06/04 – 05/10 | 7 November |
| Q3 | 01/04 – 31/12 | 06/04 – 05/01 | 7 February |
| Q4 | 01/04 – 31/03 | 06/04 – 05/04 | 7 May |
Each reporting period runs from the start of the tax year, so every update covers the year to date.
After Q4
End of Year Update
In addition to the four quarterly updates, an End of Year Update must be submitted. This includes any accounting adjustments and tax allowances that need to be reported before the Final Declaration is filed.
To finish the year
Final Declaration
The Final Declaration replaces the traditional Self Assessment tax return for individuals within the scope of Making Tax Digital for Income Tax.
Leaving MTD
Ceasing to be eligible for MTD
- Once you have crossed the MTD threshold, you must stay in MTD for a minimum of 3 years.
- If you become eligible for MTD and your qualifying income then stops during the year, you still need to submit quarterly updates up to the date it stopped, and you still need to submit the Final Declaration.
Penalty points
Late submissions earn points, not fines (at first)
| What happens | Result |
|---|---|
| A quarterly update or Final Declaration is filed late | One penalty point |
| Point threshold reached (4 points) | £200 penalty |
| Every further late submission after the threshold | Additional £200 penalty each time |
Below the threshold
If you have penalty points below the threshold and make no further late submissions, each point automatically expires 24 months after the relevant filing deadline.
At the threshold
If you have reached the penalty threshold, your points are reset only once you have completed 12 months of compliant filing and submitted all outstanding returns.
How we help
We send the updates, you get on with your work
Our MTD plans include every quarterly update, the End of Year Update and the Final Declaration, done in FreeAgent, which is HMRC-recognised and included in your fee. We review your figures each quarter, so nothing waits until January.
FreeAgent Gold Partner. Every member of the team is a FreeAgent Accredited Practitioner. More about FreeAgent
Sole Trader MTD
Up to £90K turnover
£75a month + VAT
Book a free meetingWhat's included
- Registration for taxes
- Tax return
- FreeAgent subscription
- Quarterly FreeAgent review
- Annual review meeting (on Zoom)
- Phone & email support
- Making Tax Digital submissions
Sole Trader MTD with Bookkeeping
Up to £90K turnover
£125a month + VAT
Book a free meetingWhat's included
- Registration for taxes
- Tax return
- FreeAgent subscription
- FreeAgent Smart Capture
- Quarterly FreeAgent review
- Annual review meeting (on Zoom)
- Phone & email support
- Making Tax Digital submissions
+ 1 more includedShow less
- Bookkeeping service
Rental Accounts
Per property
£25a month + VAT, per property
Book a free meetingWhat's included
- FreeAgent Rental subscription
- Tax return
- Advice on tax and rental income
- Making Tax Digital submissions
- Phone & email support
Not on MTD yet? Our Sole Trader plan is £50 a month. See all our prices.
MTD questions
What people ask us about MTD
The questions we hear most from sole traders and landlords getting ready.
Is the threshold based on my profit or my turnover?
Your turnover. Qualifying income is your gross, combined turnover from self-employment and rental income, before any expenses are taken off. So a sole trader taking £55,000 with £20,000 of costs is still over the £50,000 threshold.
I have a business and a rental property. Do I add them together?
Yes. If you are self-employed and a landlord, the gross income from both counts towards the threshold. Neither has to be over the threshold on its own.
Do I still need to file a Self Assessment tax return?
Not in the old form. Once you are in MTD for Income Tax, the Final Declaration replaces the traditional Self Assessment tax return. You'll send four quarterly updates and an End of Year Update first, then the Final Declaration.
I run a limited company. Does MTD for Income Tax apply to me?
MTD for Income Tax covers self-employment and rental income, so your company's own accounts are not part of it. If you personally have rental income, or a sideline as a sole trader, and that income is over the threshold, then it applies to that income.
My income has dropped below the threshold. Can I leave MTD?
Once you have crossed the threshold you must stay in MTD for at least 3 years. If your qualifying income stops altogether during the year, you still need to send quarterly updates up to the date it stopped, and you still need to submit the Final Declaration.
What software do I need?
Quarterly updates must be sent using HMRC-recognised software. FreeAgent is recognised for MTD for Income Tax, and a FreeAgent subscription is included in every one of our plans, so you do not need to buy anything else.
What happens if I miss a deadline?
Each late quarterly update or Final Declaration earns one penalty point. At 4 points you get a £200 penalty, and another £200 for every late submission after that. Points below the threshold expire 24 months after the deadline they relate to, as long as you file nothing else late.
Get ready for MTD
Not sure if MTD applies to you?
We'll check your income against the thresholds and tell you when your first update is due. Send us an email, use the form, or arrange a free 30-minute video call with Barry, Greg or Maria. We welcome calls on 0117 290 0007 from clients without the need for an appointment.
- Hours
- 8am to 6pm, Monday to Friday
- Book a video call
- Meet with Barry · Meet with Greg · Meet with Maria
- Visit by appointment
- 1 Park Road, Bristol, BS16 1AZ1 Lindsay Road, Bristol, BS7 9NP