Do I have to use Making Tax Digital for Income Tax?

Who has to join, and when

HMRC uses the tax return for one year to decide whether you start the following April. The income must be more than the threshold: exactly on it does not count.

From 2026 to 2027 onwards the £20,000 test is repeated every year. Once you are in, you can only leave after three tax years in a row at or below the threshold.

What counts as qualifying income

Your self-employment income plus your property income, before expenses: turnover and gross rents. If you own property jointly, only your share counts. If you live in the UK, overseas property counts too.

These do not count: wages taxed through PAYE, your share of a partnership's profit, dividends, pensions, qualifying care receipts and income from real estate investment trusts.

Exemptions and deferrals

• Automatic exemptions: no National Insurance number on the 5 April before the tax year; people whose 2024 to 2025 tax return said they cannot deal with HMRC and have someone acting under a power of attorney or as a deputy. Returns filed for a trust (SA900) or for someone who has died are exempt too, but the trustee's or personal representative's own self-employment or property income still counts.
• Deferred with no date yet: if your 2024 to 2025 tax return included the minister of religion pages, the Lloyd's member pages, or a claim to Married Couple's Allowance or Blind Person's Allowance.
• Exempt for 2026 to 2027 only: if your 2024 to 2025 tax return claimed averaging relief or qualifying care relief, or included the trust or estate income pages (SA107) or the residence pages (SA109). If it did not but you expect your next return to, apply for an exemption.
• Digitally excluded: if using software is not reasonably practicable for you, you can apply by phone or letter. HMRC aims to reply within 28 days. Cost alone, or having always filed on paper, is not enough.

Partnerships are not in Making Tax Digital for Income Tax yet.

What you must do once you are in

• Keep digital records of each income and expense: amount, date and category.
• Send a quarterly update for each business, even when there is nothing to report. Each one covers the year so far. The periods end on 5 July, 5 October, 5 January and 5 April (or on calendar quarter ends, if you choose that before your first update). The deadlines are 7 August, 7 November, 7 February and 7 May.
• File your tax return through the same software by 31 January after the tax year. There is no longer an End of Period Statement.

Penalties

Each missed deadline adds a penalty point. At 4 points you pay a £200 penalty, and £200 for each further missed deadline. For the 2026 to 2027 tax year HMRC says it will not give points for late quarterly updates; a late tax return still gets points. This concession is HMRC guidance, not law, and it does not extend to people who start in April 2027.

Late payment: 3% of the tax still unpaid at day 15, another 3% at day 30, then 10% a year for 2026 to 2027. HMRC has announced 4% and 4% from April 2027.

Choosing software

You need software that works with Making Tax Digital for Income Tax. HMRC does not provide any. Some products are free for simple affairs, with limits, and bridging software can link a spreadsheet you already use. Start with HMRC's own software finder.

Sources

Checked on 25 September 2026.

• Find out if and when you need to use Making Tax Digital for Income Tax (GOV.UK)
• Work out your qualifying income (GOV.UK)
• Find out if you can get an exemption (GOV.UK)
• Send quarterly updates (GOV.UK)
• Penalties for Making Tax Digital for Income Tax (GOV.UK)
• Choose the right software (GOV.UK)
• The Income Tax (Digital Obligations) Regulations 2026, SI 2026/336 (legislation.gov.uk)
• Finance Act 2026, section 258 (legislation.gov.uk)