September 8, 2026

Making Tax Digital for Income Tax started April 2026: which software counts, the quarterly deadlines, and when to migrate

The short answer: Making Tax Digital for Income Tax became mandatory on 6 April 2026 for sole traders and landlords whose qualifying income was over £50,000 in 2024–25, the threshold drops to £30,000 from April 2027 and £20,000 from April 2028, and the first quarterly update was due 7 August 2026. If you are inside the rules and still on a spreadsheet or a desktop product that is not on HMRC’s recognised list, you need compatible software, and the cleanest moment to migrate is the start of an update period. HMRC is not charging penalty points for late quarterly updates during 2026–27, which makes this tax year the least expensive one in which to move. This is the MTD companion to our broader UK migration guide.

Who is in, and when

HMRC’s test is qualifying income: gross self-employment and property income added together, before expenses. Sole traders and landlords registered for Self Assessment are in once it clears the threshold:

HMRC writes to people it identifies from their returns, but its guidance is explicit that checking and signing up is your responsibility whether or not a letter arrived. Partnerships are not yet in scope and limited companies are outside it entirely, though a director with rental income over the threshold is in it personally. Exemptions exist for the digitally excluded.

What the software has to do

HMRC recognises rather than recommends software, and a recognised product must do three things: create, store and correct digital records of self-employment and property income and expenses; send quarterly updates, which are category totals rather than tax returns; and submit the year-end return including other income such as employment or dividends. Full products create the records from bank feeds or manual entry; bridging products connect to records you already keep, typically spreadsheets, and make the submissions. You can use more than one product, but HMRC clarified in March 2026 that only one product may be used for each separate submission. The consequences for anyone choosing or changing software:

• A spreadsheet counts only with bridging software linked to it; re-keying totals into a form is not a digital record.
• VAT and Income Tax should share one product. HMRC tells VAT-registered traders to check that their VAT software also covers Income Tax, or the reverse.
• Update periods must match the software. If your accounts run to 31 March, choose a product that supports calendar update periods and select them before the first update; the choice is locked for the year once an update has gone.
• Check the finder tool, not the marketing. HMRC’s software finder shows what is recognised today and whether a product does updates, the return, or both. Search for your exact edition; a vendor being listed does not mean an older desktop edition is.

The deadlines that set your migration date

Quarterly updates are cumulative from the start of the tax year, so a corrected figure simply flows into the next update. Deadlines are the same for both period types.

The year-end return is still due 31 January. Penalties for late quarterly updates are points-based, with a £200 penalty at four points, but HMRC has said it will not apply points for late quarterly updates in the 2026–27 tax year; late tax returns are still penalised.

When to migrate: three options

Option 1: the start of a tax year (6 April, or 1 April on calendar periods). Cleanest. The new file holds a whole year, the old system keeps last year’s comparatives and its own return, and every update comes from one product. If you are mandated from April 2027 or 2028, plan for this date and convert in the quarter before it.

Option 2: the start of an update period. Next is 6 October (1 October on calendar periods), then January. Because updates are cumulative from 6 April, the first update from the new software must include the earlier quarters, so the conversion has to bring the year-to-date transactions, not just balances. Ask any provider which of the two is coming across before you agree a date.

Option 3: any month-end. Possible, and sometimes forced by a product being withdrawn, but it splits one update period across two systems and you pay for it in reconciliation. Keep the old system readable until the year’s return is filed. Whatever the date, the sequence is our method: agree opening balances, bring the year-to-date detail, reconcile bank and VAT, then send the first update.

Three situations we see most

Spreadsheet sole trader over £50,000. Already mandated. Bridging software is the fast fix and keeps the spreadsheet as the record; a cloud product with a bank feed is the durable one, and covers VAT if that is coming. Loading the spreadsheet history into the new product is a small conversion that stops the first cumulative update depending on two sources.

Landlord with a day job. In scope on property income alone. The product must handle property categories, joint property (income in-quarter, expenses at year end if you choose) and the employment income on the final return; many small products cover only self-employment.

Sole trader on a desktop or legacy product. If the product is not on HMRC’s list it cannot send the updates itself, and bridging products that connect to “other accounting tools” need checking against your specific export before you rely on one for four updates and a return. In practice this is a conversion to Xero or QuickBooks Online from Sage 50, or a move to a recognised product from whatever you run, with the year-to-date detail brought across so the cumulative updates reconcile.

VAT-registered as well? UK VAT schemes when you switch accounting software covers the other half of the cutover: matching the VAT scheme and moving open invoices without double-counting VAT.

Frequently asked questions

Do I need MTD for Income Tax if my turnover is under £50,000?

Not yet, unless combined self-employment and property income was over £50,000 in 2024–25. The threshold falls to £30,000 from April 2027 and £20,000 from April 2028, tested on the tax year two years earlier. Qualifying income is gross, before expenses.

Can I keep using a spreadsheet?

Yes, with bridging software that connects to it and makes the submissions. HMRC lists bridging products in its software finder. You cannot re-key totals into a portal; the link from the record to the submission has to be digital.

What happens if I miss a quarterly update in 2026–27?

HMRC has said no penalty points will be applied for late quarterly updates in the 2026–27 tax year, though you must still send all four before you can submit the tax return, and late tax returns are penalised as normal. From 2027–28 a late update earns a point and four points trigger a £200 penalty.

Can I change software part-way through the tax year?

Yes. Updates are cumulative from the start of the tax year, so the new software needs the year-to-date detail for its first update to reconcile to what the old system reported. Move at the start of an update period where you can.

Related service: conversions for UK businesses · Sage 50 → Xero · Sage 50 → QuickBooks · QuickBooks support, UK