Making Tax Digital for Income Tax explained
You've had a letter, or your accountant's mentioned it, and now there's a vague sense you're supposed to be filing something every quarter. Making Tax Digital for Income Tax is real, it's already live for the first wave of sole traders, and your turn is closer than you think.
Where it hurts
MTD for Income Tax (HMRC calls it MTD ITSA) changes how sole traders and landlords report. You keep digital records and send HMRC a summary of your income and expenses every quarter. What it doesn't do, despite what half the internet says, is replace your tax return. You still file one return a year, due 31 January as before; HMRC is explicit that the quarterly updates are summaries, not tax returns.
The rollout is by income, and the dates are now set. Over £50,000 of qualifying income on your 2024 to 2025 return and you're in from 6 April 2026, with the first quarterly update due by 7 August 2026. Over £30,000 on 2025 to 2026 and you join from April 2027; over £20,000 on 2026 to 2027, April 2028. Watch the definition: qualifying income is your combined self-employment and property income before expenses. That's turnover, not profit, so people who think of themselves as small can still be over the line.
The bit that catches people out day to day is the digital records rule. A shoebox of receipts and a year-end spreadsheet won't satisfy it. Records have to be kept in software, and the quarterly updates have to be filed from software, or through bridging software that links to your spreadsheet.
What I'd build
The line matters here: your accountant advises you on tax, I make the systems behave. I'd get the plumbing right first, MTD-compatible software (or bridging software if you'd rather keep your spreadsheet), a bank feed connected, receipts landing digitally instead of being retyped. Then the AI layer: a step that reads each transaction and receipt as it arrives, suggests the category, and queues anything it isn't sure about for you or your accountant to approve, so the quarterly totals build themselves rather than being reconstructed in a panic. And well before the first deadline I'd prove the whole chain end to end: software connected, HMRC authorisation granted, the quarter's figures flowing, so the first real update inside its filing window is a formality rather than a discovery.
What changes
- A straight answer on which start date applies to you: 2026, 2027 or 2028
- MTD-compatible software or bridging set up and filing through to HMRC
- Transactions read and categorised by AI, approved by a human, never retyped
- A test quarterly update filed, so the first real deadline isn't a scramble
Facts on this page last checked 12 July 2026, against gov.uk.
Related fixes
Sound like your week? The free half-hour review is where we work out whether this is your first fix or your fifth.