Making Tax Digital for Income Tax: What Sole Traders and Landlords in Thurrock Need to Do Now
MTD for Income Tax is no longer on the horizon. It started in April 2026 and the next group joins in April 2027. If you file a Self Assessment return, this changes how you keep records and how often you report.
Key takeaways
- MTD for Income Tax started in April 2026 for self-employed people and landlords with gross income over £50,000.
- The £30,000 group joins in April 2027 and the £20,000 group in April 2028.
- You'll keep digital records, send four quarterly updates a year and a final declaration by 31 January.
- Late submissions earn penalty points. Four extra deadlines a year means four extra chances to slip.
Who is affected, and when
HMRC is phasing MTD for Income Tax in based on your combined gross income from self-employment and property. That's turnover before expenses, not profit, and it's the figure on your most recent tax return that decides your start date.
A CIS subcontractor turning over £35,000 who also rents out a flat for £10,000 a year has £45,000 gross income. That's the April 2027 group, even though the profit after expenses is far lower.
What actually changes
- Digital recordsIncome and expenses must be kept in MTD-compatible software, or a spreadsheet linked through bridging software. A shoebox of receipts and a notebook no longer count.
- Quarterly updatesFour times a year you send HMRC a summary of income and expenses so far. No tax is paid at that point and they're not tax returns, but they are mandatory.
- Final declarationThis replaces the Self Assessment return. Adjustments, allowances and any other income are added and the year is finalised by 31 January, as now.
The quarterly deadlines
Standard quarters run to 5 July, 5 October, 5 January and 5 April. Each update is due a month later:
| Quarter ends | Update due |
|---|---|
| 5 July | 7 August |
| 5 October | 7 November |
| 5 January | 7 February |
| 5 April | 7 May |
You can elect for calendar quarters (ending 30 June, 30 September, 31 December and 31 March) if that fits your bookkeeping better.
Penalties: a points system
Late submissions under MTD earn penalty points rather than an instant fine. Reach the points threshold and a fixed £200 penalty applies, with a further penalty for each late submission after that until you reset your record with a run of on-time filings. Late payment penalties are separate and scale with how late the payment is.
The real risk isn't the size of the penalty, it's the frequency of deadlines. If your books are three months behind, every quarter becomes a scramble.
What to do this month
- Check your gross income figure on your last return and work out your start date
- Choose MTD-compatible software (Xero, QuickBooks, FreeAgent) or bridging software
- Open a separate business bank account if you don't have one
- Get into a monthly bookkeeping rhythm, not a quarterly panic
- Decide who files the quarterly updates: you, or your accountant via their agent account
- Set calendar reminders for all four deadlines plus 31 January
Frequently asked questions
My income is below £20,000. Am I exempt?
For now, yes. HMRC has said it will look at income below £20,000 in future but no date has been set. You still file a Self Assessment return as normal.
I'm a CIS subcontractor. Does this apply to me?
Yes, if your gross income is above the threshold. Your CIS deductions are still reported and reclaimed through the year-end declaration.
Can I still claim my usual expenses?
Yes. Nothing changes about what is allowable, only how it's recorded and how often it's reported.
Can my accountant do the quarterly updates for me?
Yes. An agent can submit updates and the final declaration on your behalf, which is how most of our clients handle it.
Not sure which MTD group you're in?
We'll check your figures, set up compatible software and handle the quarterly updates for you.