From 6 April 2026, the next phase of Making Tax Digital (MTD) for Income Tax comes into force in the UK.
For many self-employed individuals and landlords, this represents a fundamental change in how tax compliance is managed.

The most important point to understand from the outset is this:

The annual Income Tax return does not disappear.
However, mandatory quarterly reporting to HMRC is added under Making Tax Digital.

This distinction is often misunderstood and is critical for proper preparation.

What is quarterly reporting under Making Tax Digital?

Under MTD for Income Tax, affected taxpayers will be required to:

• keep digital records of income and expenses,
• submit four quarterly updates during the tax year,
• submit an End of Period Statement (EOPS) after the tax year ends,
• submit a Final Declaration, which completes the annual Income Tax position.

The Final Declaration performs the same function as the traditional annual Self Assessment, but it is submitted through the MTD system.
Quarterly updates are additional reporting obligations, not replacements for the annual tax calculation.

Who will be affected from 6 April 2026?

MTD for Income Tax is being introduced in stages, based on gross income from self-employment and/or UK property.

From 6 April 2026, quarterly reporting will apply to:

• self-employed individuals, and
• UK property landlords
  whose combined gross income exceeds £50,000 per year.

The thresholds will be extended in later years:

• from April 2027 – gross income over £30,000,
• from April 2028 – gross income over £20,000.

Individuals with £20,000 or less of gross income from self-employment and property remain outside MTD for Income Tax under current rules.

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The thresholds are based on gross income, not profit, and apply to the combined total of qualifying income sources.

What must be reported quarterly to HMRC?

Quarterly updates include:

• totals of income and allowable expenses,
• data submitted directly from MTD-compatible software,
• high-level figures rather than final tax calculations.

Quarterly updates do not include:

• final tax liabilities,
• reliefs and allowances in their final form,
• tax payments.

Those elements are finalised through the EOPS and Final Declaration.

What changes in practice for businesses and landlords?

For many taxpayers, the biggest change is that:

• bookkeeping can no longer be done “once a year”,
• records must be kept up to date throughout the year,
• poor record-keeping increases the risk of errors and penalties.

MTD effectively turns tax compliance into a continuous process, rather than a single annual task.

Common mistakes already emerging

We are already seeing recurring issues, including:

• leaving bookkeeping until year end,
• failing to separate costs between different income sources,
• relying on spreadsheets without proper digital links,
• confusing income with profit,
• assuming the accountant can “fix everything later”.

Under MTD, this approach creates unnecessary risk.

How to prepare your business for MTD quarterly reporting

Effective preparation should include:

1. reviewing existing bookkeeping processes,
2. selecting appropriate MTD-compatible software,
3. cleaning up historical data,
4. setting a clear reporting timetable,
5. engaging a tax adviser early in the process.

The earlier preparation begins, the smoother the transition will be.

What happens if you are not prepared?

MTD introduces a points-based penalty system for late or missed submissions.
Failure to prepare may result in:

• financial penalties,
• increased HMRC attention,
• higher compliance costs at short notice,
• operational disruption to the business.

Summary

From 6 April 2026, self-employed individuals and landlords within scope of MTD will be required to:

• continue completing an annual Income Tax return, now submitted as a Final Declaration,
• additionally submit quarterly updates to HMRC during the tax year,
• maintain digital records using compliant software.

Making Tax Digital is not simply a change in forms — it is a new model of tax compliance.
Businesses and landlords who prepare early will avoid stress, reduce risk and maintain control over their tax position.

Need help preparing for Making Tax Digital?

We support self-employed individuals and landlords with MTD readiness, software selection and ongoing compliance under the new quarterly reporting regime.