The clock is ticking for almost 864,000 sole traders and landlords who must submit their first quarterly update for Making Tax Digital (MTD) for Income Tax by 7 August 2026. This crucial deadline marks a significant milestone in HM Revenue & Customs' drive to modernise the tax system, with these taxpayers required to adopt digital record-keeping and report income and expenditure on a quarterly basis.
Under MTD, these businesses will submit concise summaries of their income and expenses through recognised software, rather than annual full tax returns. This shift is not only a legal requirement for those earning over £50,000 but also a significant change in the way they manage their finances. HMRC estimates that each submission takes just minutes to complete, with users receiving an estimated tax bill afterwards.
Craig Ogilvie, Director of Making Tax Digital at HMRC, describes this as "a landmark moment" for the tax system, highlighting the progress made so far in getting hundreds of thousands to adopt digital record-keeping. He urges those who have not yet signed up to do so via GOV.UK, where guidance and compatible software options are available.
The MTD initiative is part of a broader government drive towards greater efficiency and accuracy in tax administration. While quarterly updates will provide ongoing insights, the traditional tax return deadline of 31 January remains in place for annual returns and outstanding tax liabilities. From April 2027, the scope of Making Tax Digital for Income Tax will expand further to include sole traders and landlords earning more than £30,000.
The final phase of MTD's expansion, set to begin in April 2028, will bring those earning over £20,000 into the framework. This comprehensive shift towards digital tax reporting is expected to significantly impact the way most self-employed individuals and landlords manage their finances, with a greater emphasis on timely record-keeping and regular updates.