The first quarterly deadline under Making Tax Digital for Income Tax passed on 7 August 2026, marking a significant change in how some sole traders and landlords report their finances to HM Revenue & Customs. Those already within the system are now required to maintain digital records and submit summaries of their income and expenses every three months.
The rules initially apply to people whose combined qualifying income from self-employment and property exceeded £50,000 in the 2024/25 tax year. According to HMRC, around 864,000 people were expected to enter the new system from April 2026, with more taxpayers due to follow as the qualifying threshold is lowered over the next two years.
Who Is Affected by the New Reporting Rules
Qualifying income is based on gross turnover rather than profit. This means that expenses and tax allowances are not deducted when determining whether someone crosses the £50,000 threshold. A sole trader or landlord with substantial costs may therefore still fall within the system even if their taxable profit is considerably lower.
HMRC has said that people earning from both self-employment and property must keep separate records for each source and submit separate quarterly updates. Other forms of income are not included when HMRC calculates whether the qualifying threshold has been reached.
The reporting process must be completed using recognised software that can maintain digital records and send updates directly to HMRC. According to the government’s Making Tax Digital guidance, both free and paid software options are available, while bridging software can allow some taxpayers to continue working with spreadsheets.
Quarterly updates are summaries rather than full tax returns. The first period ran from 6 April to 5 July, with a filing deadline of 7 August. The next deadlines are 7 November 2026, 7 February 2027 and 7 May 2027. Taxpayers will still submit an annual tax return. HMRC states that the new system does not change the existing 31 January deadline for paying Income Tax.
What Happens After a Missed Deadline
HMRC issued a warning after the first deadline passed, telling affected taxpayers who had not filed their update to “act now”. Anyone who missed the 7 August date is still expected to submit the outstanding information rather than wait for the next quarterly deadline.
There is no late-submission penalty for quarterly updates during the 2026/27 tax year. According to HMRC’s Making Tax Digital guidance, all quarterly updates must still be submitted before the taxpayer can complete the relevant tax return, while existing penalties for late tax returns or late tax payments remain in place.
The system will expand further from 6 April 2027, when sole traders and landlords with qualifying income above £30,000 will be required to use Making Tax Digital. HMRC figures cited in the source indicate that another 1.077 million people fall between the £30,000 and £50,000 thresholds.
From 6 April 2028, the threshold will fall to £20,000. A further 975,000 people with qualifying income between £20,000 and £30,000 are expected to enter the system at that stage. For those already covered, the immediate requirement is straightforward: keep digital records, submit the overdue update if necessary, and prepare for the second quarterly deadline on 7 November 2026.
