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Navigating the first year of Making Tax Digital for Income Tax
Discover what Making Tax Digital for Income Tax means for you - understand what’s changing, who needs to join and when and how we can help you prepare and stay compliant.
Read time: 7 mins Added: 30/01/26
Quick links: In this guide
What is Making Tax Digital for Income Tax?
What this means for sole traders and landlords
This new approach can benefit you by spreading your tax admin across the year through maintaining digital records, helping to reduce errors and keep your information up to date. It’ll also provide a tax estimate after each quarter, easing the pressure of the year‑end rush.
Making Tax Digital for Income Tax becomes mandatory for some sole traders and landlords from this year (we explain who is affected and when later in this guide). If you’re in scope, you’ll need to stay on top of the new requirements to avoid HMRC’s new penalties.
Who needs to get ready for Making Tax Digital for Income Tax?
HMRC is introducing Making Tax Digital for Income Tax in phases based on your qualifying income – that’s your total gross income (before deducting expenses or taxes) from self‑employment and/or property added together. Other income types, for example, PAYE employment, dividends, and pensions do not count towards the thresholds below.
Still not sure if you’re in scope? Check out some examples below.
Here are some examples
Key dates for sole traders and landlords who need to start complying this year
If your qualifying income for the 2024/25 tax year is over £50,000, your Making Tax Digital for Income Tax start date is 6 April 2026. From then, you will need to keep your digital records in compatible software and connect to HMRC to send quarterly updates. Standard deadlines for updates are 7 August, 7 November, 7 February, 7 May.
Note: your 2025/26 Self Assessment tax return is due on 31 January 2027, and it should be completed under the existing Self Assessment process through HMRC online services. That’s because Making Tax Digital for Income Tax doesn’t apply retrospectively to earlier tax years, which means the 2025/26 return (the year that ended on 5 April 2026) sits outside the new Making Tax Digital for Income Tax service.
Check the timeline for what the key dates will look like if you start using Making Tax Digital for Income Tax from 6 April 2026.
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MTD for Income Tax timeline Date
Event
Date
6 April 2026
Event
When you must start keeping records using MTD for Income Tax software
Date
7 August 2026
Event
Deadline to send your first quarterly update
Date
7 November 2026
Event
Deadline to send your second quarterly update
Date
31 January 2027
Event
Deadline to submit a Self Assessment tax return the usual way for 2025 to 2026
Date
7 February 2027
Event
Deadline to send your third quarterly update
Date
7 May 2027
Event
Deadline to send your fourth quarterly update
Date
7 August 2027
Event
Deadline to send your first quarterly update for 2027 to 2028
Date
7 November 2027
Event
Deadline to send your second quarterly update
Date
31 January 2028
Event
Deadline to submit your tax return straight from MTD for Income Tax software for 2026 to 2027
Date
7 February 2028
Event
Deadline to send your third quarterly update
Date
7 May 2028
Event
Deadline to send your fourth quarterly update
How to prepare for Making Tax Digital for Income Tax?
- Understand the rules and timing. Confirm if and when you’ll need to start using Making Tax Digital for Income Tax based on your qualifying income and what you’ll do differently.
- Pick compatible software. Find software that works with HMRC’s Making Tax Digital for Income Tax service to keep digital records of your income and expenses, send quarterly updates, and submit your tax return by 31 January the following year.
- Separate business and personal transactions. If you currently run your business through a personal bank account, consider opening a separate business account before your Making Tax Digital for Income Tax start date. That way, all your business transactions will be in one place, making your records tidy for quarterly updates and tax return.
While all reasonable care has been taken to ensure that the information provided is correct, no liability is accepted by Lloyds for any loss or damage caused to any person or business relying on any statement or omission. This is for information only and should not be relied upon as offering tax or legal advice for any set of circumstances. Specific independent advice should always be sought in each instance.
Already have a Lloyds Business Account?
You’ll automatically get access to our built‑in Making Tax Digital for Income Tax accounting tool at no extra cost when it launches.