Making Tax Digital for Income Tax launched on 6 April 2026, and the first quarterly update is now due by 7 August 2026. Around 780,000 sole traders and landlords fall within scope, yet fewer than a third had reportedly signed up by mid-April.
Key figures at a glance:
- MTD launched on 6 April 2026 for those with qualifying income above £50,000
- First quarterly update covers 6 April to 5 July 2026, due by 7 August 2026
- ~780,000 sole traders and landlords are in scope for the first phase
- HMRC is not issuing penalty points for late quarterly updates during 2026 to 2027
- Mandation threshold drops to £30,000 from April 2027 and £20,000 from April 2028
Why the 7 August MTD deadline matters
The first quarterly update covers the period from 6 April to 5 July 2026. Affected taxpayers are required to file a digital summary of income and expenses by 7 August 2026.
This is not a tax payment. Quarterly updates are information reports showing what a business or property earned and spent.
Qualifying income is based on combined gross receipts from self-employment and UK property on the 2024 to 2025 tax return. Anyone whose combined figure exceeded £50,000 falls into the first mandation group.
Joint property owners only count their individual share towards the threshold. Income from PAYE employment, pensions, and dividends is excluded.
What affected taxpayers need to submit
Each quarterly update is a cumulative summary of income and expenses. It is filed digitally through HMRC-recognised software — paper records are no longer accepted.
A separate update is required for each income source. A sole trader with rental income submits two updates per quarter — one for the trade and one for property.
Those whose gross qualifying income sits below the VAT threshold of £90,000 may use simplified reporting. Total income and expenses can be submitted without category breakdowns, although mortgage interest is still reported separately.
Errors in a quarterly update do not require a resubmission of that period. Because updates are cumulative, corrections can typically be included in the next quarter.
Full MTD deadline calendar for 2026 to 2027
The quarterly update deadlines for the first MTD year fall on the 7th of the month after each quarter ends:
- Q1 (6 April to 5 July 2026) — due 7 August 2026
- Q2 (6 July to 5 October 2026) — due 7 November 2026
- Q3 (6 October 2026 to 5 January 2027) — due 7 February 2027
- Q4 (6 January to 5 April 2027) — due 7 May 2027
- Final declaration for 2026 to 2027 — due 31 January 2028
Taxpayers who prefer calendar-month reporting may elect calendar quarters before their first update. Under this option, Q1 runs from 1 April to 30 June, but the 7 August deadline is unchanged.
Tax payment deadlines are not affected by MTD. Payments on account remain due on 31 January and 31 July, as under the existing Self Assessment timetable.
Penalties and the first-year soft landing
HMRC has confirmed a soft landing for the 2026 to 2027 tax year. Taxpayers mandated from April 2026 are not receiving penalty points for late quarterly updates during this period.
From 2027 to 2028 onwards, the full points-based penalty system applies. Each missed deadline adds one point, and a financial penalty of £200 is triggered once four points are reached.
The soft landing covers quarterly updates only. Late filing of the final declaration, due 31 January 2028, could still result in a penalty point.
Late payment penalties also remain in force throughout the soft-landing period.
Costs and the wider rollout
HMRC does not provide free MTD filing software. Taxpayers are required to use commercial MTD-compatible options, ranging from free to around £130 per year depending on the provider.
According to HMRC’s impact assessment, the estimated transitional cost to businesses is around £561 million, with ongoing annual compliance costs rising by approximately £196 million. On an individual basis, that translates to a set-up cost of roughly £320 and an annual increase of around £110.
The mandation threshold is set to fall to £30,000 from April 2027, bringing an estimated 970,000 additional sole traders and landlords into scope. A further reduction to £20,000 is planned from April 2028.
What to do before 7 August 2026
If you are a sole trader or landlord with qualifying income above £50,000, you should already be keeping digital records. The steps below may help if you have not yet started.
How to prepare for your first quarterly update
- Check whether your combined gross income from self-employment and UK property on your 2024 to 2025 tax return exceeded £50,000.
- Choose MTD-compatible software recognised by HMRC, and connect it to your bank accounts where possible.
- Sign up through HMRC’s online service using your Government Gateway account — HMRC does not register you automatically.
- Enter income and expenses for 6 April to 5 July 2026 into your software as you go, rather than leaving it until the deadline.
- Submit your Q1 update through your software by 7 August 2026.
Quarterly updates can be prepared on a cash basis. There is no requirement to account for accruals or prepayments at this stage.
Could you be owed a tax rebate?
The shift to quarterly reporting may prompt some taxpayers to look more closely at their tax affairs. Overpayments often arise from incorrect tax codes, unclaimed expenses, or changes in employment status.
If you are navigating MTD for the first time, you may want to check whether you are owed money from previous tax years. The Tax Rebate Services guide to Making Tax Digital explains how the new system interacts with existing obligations.
Key Takeaways
- MTD for Income Tax went live on 6 April 2026 for sole traders and landlords with qualifying income above £50,000.
- The first quarterly update, covering 6 April to 5 July 2026, is due by 7 August 2026.
- Quarterly updates are information reports, not tax payments — payment deadlines remain 31 January and 31 July.
- HMRC is not issuing penalty points for late quarterly updates during 2026 to 2027, but the final declaration deadline is not covered by the soft landing.
- Taxpayers should sign up, choose compatible software, and begin recording income and expenses digitally as early as possible.
