Who needs to use Making Tax Digital for small business in 2026?

Sole traders and landlords with combined gross income over £50,000 from self-employment and property (before expenses) must use Making Tax Digital for Income Tax from 6 April 2026. The threshold drops to £30,000 in April 2027 and £20,000 in April 2028. PAYE employment income, dividends, savings interest, and pensions are excluded from the qualifying income calculation.

Does Making Tax Digital mean I pay tax four times a year?

No. Quarterly updates are information summaries only — they do not trigger any tax payment. Payment dates remain unchanged: 31 January (balancing payment plus first payment on account) and 31 July (second payment on account). MTD changes how you report income, not when you pay tax.

When is the first Making Tax Digital submission deadline in 2026?

The first quarterly update covers 6 April to 5 July 2026 and must be submitted by 7 August 2026. As of April 10, 2026, fewer than 3 in 10 eligible sole traders and landlords have signed up. HMRC has confirmed it will contact those who miss the August 7 deadline. A soft landing applies for 2026-27 meaning no penalty points for late quarterly submissions, but late payment penalties still apply.

What software do I need for Making Tax Digital?

You need HMRC-recognised software to keep digital records and submit quarterly updates. Full accounting platforms (Xero, QuickBooks, FreeAgent, Sage) handle both record-keeping and submission. Bridging software (TaxCalc, Absolute Tax) allows you to keep using Excel spreadsheets while meeting the digital link requirement. FreeAgent is free permanently for NatWest and RBS business account holders.

My profit is below £50,000 but my turnover is above. Am I in scope for MTD?

Yes. The £50,000 threshold applies to gross income (turnover) before any expenses are deducted — not profit. A sole trader invoicing £58,000 with £30,000 costs has qualifying income of £58,000 and is in Phase 1 from April 2026. This is the most common misunderstanding about MTD eligibility.

Do I need to sign up for MTD or does HMRC enrol me automatically?

You must actively sign up for MTD for Income Tax via GOV.UK. HMRC does not automatically enrol you. You need your Government Gateway credentials and to confirm your business start date. Your accountant can also sign you up on your behalf via agent authorisation. Simply having compatible software is not sufficient — you must register separately.

Does Making Tax Digital apply to limited companies?

No. Limited companies pay Corporation Tax, not Income Tax. MTD for Corporation Tax has no confirmed mandatory date and has been explicitly deprioritised by HMRC. The current MTD for Income Tax requirements apply only to sole traders and landlords — not to limited companies.

I use Excel for my accounts. Can I still use it under Making Tax Digital?

Yes, but only with bridging software. Your Excel spreadsheet must connect digitally to an HMRC-recognised submission tool — you cannot manually retype figures. Bridging tools like TaxCalc (from approximately £20 per year) read your spreadsheet and submit to HMRC electronically, maintaining the required digital link. Copy-pasting figures between spreadsheets breaks the digital link and is non-compliant.

Making Tax Digital for Small Business 2026: Complete UK Guide

Last Updated on October 18, 2026 by ThriveOnz360 Editorial

UK tax · Making Tax Digital

Making Tax Digital for Income Tax, in plain English.

Who has to use it, what changes, and what to do now. The free guide has the scenarios.

Get the free MTD guide

Checked against gov.uk on 18 October 2026. Rules change: confirm on gov.uk.

The 30-second verdict

It applies to you if

You are a sole trader or landlord with self-employment and property income over £50,000
HMRC has told you it has signed you up
You want to get ready before your first quarterly update

You are probably not required if

Your qualifying income is under £50,000: you are not required yet, but you can sign up voluntarily
You are not registered for Self Assessment

The basics

What gov.uk says

Point	Detail
From 6 April 2026	Sole traders and landlords with qualifying income over £50,000 must use it
HMRC sign-up	From September 2026 HMRC starts signing up people it believes need to use it, based on qualifying income over £50,000 in 2024 to 2025
Voluntary	You can sign up early even if you are required later

Source: gov.uk Making Tax Digital for Income Tax, checked 18 October 2026. Qualifying income is gross income, not profit. Later thresholds are set out on gov.uk.

What to do

What to do now

Work out your qualifying income (gross, before expenses).
Check whether HMRC has already signed you up.
Pick software that works with Making Tax Digital, or ask your accountant.
Learn how quarterly updates and the final declaration work, then diarise the dates from gov.uk.

Avoid these

Mistakes to avoid

Using profit instead of gross income for the threshold
Waiting until after your first quarter to choose software
Assuming you do not need to act because your accountant does your return

Questions

FAQs

Does it cost anything to get the guide?

No. Our MTD guide is free.

Where do I find the deadlines?

On gov.uk under Making Tax Digital for Income Tax, in the section on quarterly updates.

Do I need an accountant?

Not necessarily. It depends on your software and how complex your affairs are.

Get the free guide

Open the MTD guide Tell us your situation

Official: Making Tax Digital for Income Tax (gov.uk). A person replies within 48 hours. General information, not tax advice.

ThriveOnz360 Editorial

Published by ThriveOnz Group UK Ltd, a company registered in England and Wales. Some links on this site are affiliate links and are always disclosed. General information, not legal, tax or financial advice. See our Editorial Standards.