Making Tax Digital for Income Tax became a reality for the first group of sole traders and landlords from April 2026.
For those required to join from 6 April 2026, the first quarterly update should now have been submitted, with the first standard deadline falling on 7 August 2026.
So, what happens next?
MTD is about keeping on top of your records
One of the biggest changes with Making Tax Digital is that bookkeeping can no longer simply be something that happens once a year when the Self Assessment deadline approaches.
Under MTD, qualifying sole traders and landlords need to maintain digital records and send quarterly summaries of their income and expenses to HMRC using compatible software.
The quarterly update itself is only part of the process.
The real benefit should come from keeping your bookkeeping reasonably up to date throughout the year.
If the first quarter involved trying to find three months of bank statements, invoices and receipts at the last minute, now is a good opportunity to change the process before the next deadline.
The next quarterly deadline
For businesses following the standard quarterly timetable, the next MTD quarterly update is due by 7 November 2026.
That means September is a useful point to review July and August and make sure the bookkeeping is moving in the right direction.
Rather than waiting until the beginning of November, consider dealing with records monthly.
Even spending a short amount of time each month checking transactions can make the quarterly process considerably easier.
Are the quarterly figures your final tax figures?
Not necessarily.
Quarterly updates are intended to provide HMRC with summaries of income and expenses during the year.
There may still be yearend adjustments required before the final taxable profit is established.
For example, your accountant may need to consider capital allowances, private use adjustments or other tax adjustments when preparing the final figures.
The quarterly submissions therefore do not remove the need for yearend accounts and tax work.
Use MTD to understand your business
MTD should not simply become another HMRC deadline.
If your accounts are being maintained throughout the year, the same information can help you understand:
- how much profit you are making;
- whether costs are increasing;
- how much money customers owe you;
- what upcoming tax liabilities might be;
- whether you need to put more money aside for tax.
Good bookkeeping should help the business as well as satisfy HMRC.
Who needs to think about MTD?
The first mandatory group entered MTD for Income Tax from April 2026, based on qualifying self-employment and property income exceeding £50,000.
The threshold reduces to £30,000 from April 2027, bringing significantly more sole traders and landlords into the system.
If your income is around these levels, it is worth understanding the rules before they apply to you.
Changing bookkeeping systems and working practices is much easier when it is planned rather than left until the deadline.
What should you do now?
If you have completed your first MTD quarter, take a few minutes to consider how it went.
Was the bookkeeping up to date?
Were receipts missing?
Did you understand the figures?
Was everything left until the last minute?
The second quarter is an opportunity to improve the process.
Making Tax Digital means more regular reporting, but with the right systems in place, it should also mean fewer surprises at the end of the tax year.
