July 2027

After years of delays, discussions and preparation, Making Tax Digital for Income Tax is finally here—and the first quarterly reporting period has now come to an end.

For sole traders and landlords included in the first phase of MTD, digital records should have been kept from 6 April 2026. The first reporting period ended on 5 July, with the initial quarterly update due to HMRC by 7 August 2026.

Although quarterly updates are not full tax returns, this is a major change to the way many individuals report their business and property income. Instead of dealing with everything once a year, records must now be maintained digitally and information submitted to HMRC throughout the year.

We have already contacted all clients who we believe are affected this year, and our preparation for their first submissions is well underway. However, if you are unsure whether MTD applies to you—or you have not yet registered, chosen suitable software or brought your records up to date—now is the time to get it sorted.

The first phase of MTD for Income Tax began on 6 April 2026. It applies to sole traders and landlords whose total qualifying income from self-employment and property was more than £50,000 in the 2024/25 tax year.

💡 Remember: The £50,000 threshold is based on gross income before expenses—not profit.

It also looks at your combined qualifying income. If you have more than one sole trade, several rental properties, or a mixture of self-employed and property income, the relevant income from all these sources is added together.

MTD will then be extended to more taxpayers:

📅 From April 2027: Those with qualifying income over £30,000 will be brought into MTD.

📅 From April 2028: The threshold is due to reduce to £20,000.

HMRC may have written to you if its records suggest you are affected. However, even if you have not received a letter, it remains your responsibility to check whether you need to comply.

MTD changes the way sole traders and landlords keep their records and report information to HMRC.

If you are affected, you must:

✅ Keep digital records of your business or property income and expenses.

✅ Use software that is compatible with MTD.

✅ Send a summary of your records to HMRC every quarter.

✅ Complete the year-end process through your software.

The good news is that a quarterly update is not another full tax return. It is a summary of the income and expenses recorded in your software during the relevant period. At the end of the year, you will need to finalise your overall tax position. This includes checking the figures, making any necessary adjustments, declaring other income and gains, and claiming the reliefs and allowances available to you.

For those using the standard tax-year reporting periods, the MTD deadlines for 2026/27 are:

First update 6 April to 5 July 2026 7 August 2026

Second update 6 April to 5 October 2026 7 November 2026

Third update 6 April 2026 to 5 January 2027 7 February 2027

Fourth update 6 April 2026 to 5 April 2027 7 May 2027

Businesses using calendar quarters can choose to report from 1 April instead. However, this option must be selected in the software before the first quarterly update is submitted and cannot then be changed for the remainder of the tax year.

With the first deadline fast approaching, now is the time to make sure everything is in place.

Before 7 August, you should check that:

🔎 You know whether MTD applies to you.

📝 You have been registered for MTD for Income Tax.

💻 Compatible software has been selected and connected to HMRC.

🧾 Your income and expenses have been recorded digitally from 6 April 2026.

📚 Your bookkeeping is complete up to 5 July 2026.

👥 You know whether you or your accountant will submit the update.

If you use spreadsheets, you may still be able to use them as part of your record-keeping system. However, your records must connect to compatible software through the required digital links. Simply copying and pasting figures between separate systems may not meet HMRC’s requirements.

First of all—do not panic. But equally, do not ignore it!

There is still time to register, choose suitable software and bring your bookkeeping up to date, but the 7 August deadline is now very close.

HMRC has confirmed that it will not issue penalty points for late quarterly updates during the first mandatory year, 2026/27. However, this does not mean the updates are optional.

You must still keep digital records and submit all the required quarterly updates before you can complete your final tax return. The usual penalties can also still apply if your tax return is filed late or your tax bill is not paid on time.

Getting the process right from the beginning will make each future quarter much easier. Regular bookkeeping can also give you a clearer picture of how your business or property portfolio is performing—rather than discovering everything several months after the year has ended.

Whether you need someone to take care of the entire process or simply want reassurance that everything has been set up correctly, we are here to help.

We can:

✔️ Check whether MTD applies to you.

✔️ Register you for MTD for Income Tax.

✔️ Arrange the necessary HMRC agent authorisation.

✔️ Help you choose and set up suitable software.

✔️ Maintain or review your digital bookkeeping records.

✔️ Prepare and submit the quarterly updates on your behalf.

We have already contacted the clients we believe are affected this year, and preparation for their first submissions is well underway. However, if you think MTD may apply to you and you have not heard from us—or you are not currently a client and need help getting ready—please get in touch as soon as possible.

We can review your position, explain exactly what you need to do and help you get everything sorted before the first deadline.