Who's in, and when
Making Tax Digital for Income Tax applies to sole traders and landlords based on qualifying income — your gross self-employment turnover plus gross property income, before expenses (a nasty detail: £40k of trade income plus £15k of rent = £55k = in scope, even if your profit is modest):
- Over £50,000 — in scope now (from 6 April 2026), based on your 2024/25 return
- Over £30,000 — joins 6 April 2027
- Over £20,000 — joins 6 April 2028
In scope means three obligations: digital records (software, not a paper diary), quarterly updates to HMRC, and a year-end final declaration replacing the old return. The full guide covers the deadlines, the penalty maths and the honestly-quite-easy setup.
What this guide covers
- Who's in scope now, in 2027 and in 2028 — with the income test explained
- The quarterly deadlines and what actually gets sent
- The new points-based penalty system
- A 20-minute setup that makes the whole thing automatic
The quarterly rhythm
Updates cover fixed quarters with deadlines a month and a bit after each:
- 6 April – 5 July → due 7 August
- 6 July – 5 October → due 7 November
- 6 October – 5 January → due 7 February
- 6 January – 5 April → due 7 May
Each update is a summary of income and expenses for the period — not a tax return, not a payment, and not final (you fix errors cumulatively in later updates). Tax is still paid on the old dates: 31 January and payments on account on 31 July. After year-end, a final declaration adds the rest (reliefs, other income, adjustments) and replaces the Self Assessment return — due 31 January as before.
Penalties: the points system
Miss a quarterly deadline and you get a penalty point. Hit the points threshold and it's a £200 fine, then £200 for every further miss until a clean streak resets you. Late payment is separate and sharper: nothing for a fortnight, then ~3% at 15 days, more at 30, plus interest. The design punishes chronic lateness rather than one slip — but four deadlines a year means four chances to drift.
The 20-minute setup that makes this automatic
- Use MTD-recognised software. FreeAgent — included free in every one of our packages — is fully MTD-ready for Income Tax.
- Connect your business bank account. Transactions flow in daily; FreeAgent learns your categories. (A separate business account matters more than ever — a free Mettle account pairs natively with FreeAgent.)
- Snap receipts as they happen. Phone camera → filed. That's the "digital records" requirement, met.
- Let the quarters file themselves. With the feed categorised, each quarterly update is a review-and-send job — ours to do, if you're a client.
The honest upside Sole traders who moved onto software stop describing tax as scary — because a live estimate of the bill sits on the dashboard all year. MTD forces a habit that was worth having anyway. The losers are only the people who ignore it until 6 February.
Special cases
- Under the threshold? Nothing is mandatory yet — but your 2025/26 and 2026/27 returns decide when you join, so watch the £30k and £20k steps.
- Trade + rental income? Both count towards qualifying income, and each needs its own quarterly updates.
- Genuinely can't do digital? Exemptions exist (age, disability, location, religious grounds) — they must be applied for, not assumed.
- New sole trader? You generally enter MTD after your first Self Assessment return shows qualifying income over the threshold — so there's a run-up year to get the habit in place.
We're doing MTD onboarding calls every week right now. If you'd rather your quarterly updates were simply done, get started — the setup, the software and the filings are all in the flat fee.
