The 7 August 2026 deadline is closing in. Some in-scope sole traders and landlords may still be preparing for the transition to Making Tax Digital for Income Tax, and if you’re one of them, now really is the time to pay attention. HMRC’s Making Tax Digital for Income Tax has been live since 6 April 2026, which means the first quarterly submission is already on the horizon. Missing the deadline could result in compliance issues and additional administrative work.
MTD for Income Tax isn’t a minor admin tweak. It changes how you keep your records, the tools you use, and how regularly you’re reporting to HMRC. If your plan was to deal with it in January, that ship has sailed.
What is Making Tax Digital for Income Tax?
MTD for Income Tax replaces the annual Self Assessment return with quarterly digital reporting. Four times a year, you send a summary of your income and expenses to HMRC through approved software. At the end of the tax year, you submit a final declaration instead of the old tax return.
Payment deadlines don’t change and the 31 January date stays in place. What changes is how often you’re reporting and how you’re doing it. No more pulling twelve months of receipts together in January.
Who's affected?
The rollout is happening in stages and your start time is dependent upon your qualifying income.
- From 6 April 2026, it applies to sole traders and landlords with qualifying gross income over £50,000. This is based on the 2024/25 tax return.
- From 6 April 2027, the threshold drops to £30,000.
- From 6 April 2028, it extends to anyone earning over £20,000.
Qualifying income is your gross income before expenses or tax, combining self-employment and property income. PAYE wages and pension income are excluded.
HMRC sent mandation letters to people who hit the £50,000 threshold, but not getting one doesn’t mean you’re exempt. If your income was over £50,000 in 2024/25, you’re in scope whether a letter arrived or not.
What the 7 August deadline actually means
MTD for Income Tax went live on 6 April 2026. The first quarterly period runs from 6 April to 5 July 2026. That update needs to reach HMRC by 7 August 2026.
If you haven’t signed up yet or sorted your software, you’re already behind. HMRC has confirmed there won’t be penalty points for late quarterly submissions during 2026/27, so there’s a soft landing this first year. The grace period doesn’t cover your final declaration or late tax payments though. Both carry full consequences from day one.
What you need to do
Sign up properly
You can’t submit quarterly updates through the standard HMRC online account. You have to formally sign up for MTD for Income Tax through HMRC’s dedicated service. If you use an accountant, they can do this through their agent services account on your behalf.
Choose MTD-compatible software
HMRC isn’t building its own tool, so you’ll need software from their approved list. Xero, QuickBooks, FreeAgent, and Sage are among the well-known options, though others exist. If you’re already using cloud accounting software, it may already be MTD-compatible since most providers updated their platforms ahead of April 2026.
Think about what actually suits your situation. If you’re both self-employed and a landlord, you’ll need software that handles separate income streams, because they have to be recorded and reported separately. If you’re managing your own books, ease of use matters too.
Keep digital records properly
Every item of income and expense tied to your self-employment or property has to be recorded digitally going forward. A standard spreadsheet that’s not connected to MTD-compliant software no longer meets the requirement. That doesn’t mean receipts need to be scanned on the spot, but you do need a proper digital system in place.
The quarterly deadlines for 2026/27
Here are the four submission dates for this tax year:
Q1 covers 6 April to 5 July 2026 and is due by 7 August 2026. Q2 covers 6 July to 5 October 2026 and is due by 7 November 2026. Q3 covers 6 October 2026 to 5 January 2027 and is due by 7 February 2027. Q4 covers 6 January to 5 April 2027 and is due by 7 May 2027.
You can align your quarters to calendar month ends if that fits your bookkeeping better. The deadlines stay the same either way, but you need to make that election before your first update of the tax year.
What you're actually sending to HMRC
Quarterly updates are a record of your income and expenses for that period. Nothing more complicated than that. You don’t make tax adjustments within them, and no tax is calculated or becomes payable as a result of submitting them.
The tax calculation happens at the end through the final declaration, which replaces the Self Assessment return. It’ll be pre-populated with your quarterly data and you’ll add any year-end adjustments there, things like capital allowances. The 31 January deadline for this doesn’t change.
If you’ve come across references to an End of Period Statement in older MTD guidance, that requirement has been scrapped. It’s now folded into the final declaration process.
What if your income has dropped below £50,000?
HMRC has clarified this after a lot of confusion. You can only exit MTD if all of your qualifying income sources have completely stopped. If you’ve wound down one business but you’re still earning from another self-employment or from property, you remain in scope. Stopping one stream while another continues doesn’t get you out. Contact HMRC before 7 August if you think you may qualify to exit.
Penalties
HMRC is bringing in a points-based system. Miss a submission and you get a point. Hit four points and a £200 fine is issued, with another £200 for each late submission after that. Penalty points for quarterly updates won’t apply during 2026/27 as people get used to the new process, but that doesn’t cover the final declaration or late payments.
Late payment penalties start at 2% of unpaid tax after 15 days, rising to 4% after 30 days, with interest running from day one.
Speak to 3E's Accountants
Whether you need help signing up, choosing the right software, or just want to hand this over to someone who knows the system, our team works with sole traders and landlords across the UK every day. Get in touch and we’ll make sure you’re sorted well before the deadline.
