MTD for Income Tax Since 6 April 2026: What Changed and What Comes Next

What Changed on 6 April 2026

Before April 2026, sole traders filed a single Self Assessment tax return once a year, typically by 31 January. Since April 2026, those above the threshold must instead submit four quarterly updates during the year. Each update covers the tax year so far, so the figures build up from one quarter to the next. The guide to what a quarterly update is and what the tax return adds sets the two side by side.

These quarterly updates are not final tax bills. They are running totals of your trading income and allowable expenses for the year so far. After the tax year ends you make any year-end adjustments and then a Final Declaration (previously called crystallisation), which is where you finalise your tax position, claim reliefs, and confirm everything is correct.

Think of it as replacing one annual exam with four short pieces of coursework plus a final exam. The total workload is similar, but spread across the year.

MTD ITSA Quarterly Deadlines (2026-27)

The tax year runs 6 April to 5 April, split into four quarters. Each quarterly update is due on the 7th of the month after its quarter ends, so the first for 2026–27 was due by 7 August 2026, the next (the quarter to 5 January 2027) is due by 7 February 2027, and the last is due by 7 May 2027. The deadline finder lists every date, for standard and calendar quarters and for later years.

The Final Declaration must be completed by 31 January 2028 (the same deadline the Self Assessment return had for that tax year).

For the 2026–27 tax year HMRC has said there are no penalties for missing a quarterly update deadline. From 2027–28 each missed deadline earns a penalty point, and at 4 points HMRC charges a £200 penalty. If you are required to join in April 2027, Budget 2026 announced no points for your 2027-28 quarterly updates, though it is not law yet. A late Final Declaration or a late payment is penalised in 2026–27 as well.

Who Has Had to Comply Since April 2026

The April 2026 threshold is gross income of £50,000 or more from self-employment and/or UK property. "Gross" means before expenses: a sole trader with £55,000 in sales and £20,000 in costs still has gross income of £55,000 and must comply.

If you have both a business and rental income, these are combined for the threshold. A sole trader earning £35,000 from their business and £18,000 from a rental property has £53,000 gross income and must comply.

From April 2027, the threshold drops to £30,000. HMRC has confirmed the voluntary sign-up scheme remains open. You can join MTD ITSA before your mandatory date if you want to get used to the system.

In Scope and Not Set Up Yet? What to Do Now

First: check whether your gross income exceeds £50,000 (use the MTD checker). HMRC will contact taxpayers it believes are in scope, but self-assessment is your responsibility. Do not wait for a letter.

Second: choose and sign up to MTD-compatible software. You cannot use HMRC's own website to make MTD ITSA submissions. You must use third-party software that connects directly to HMRC's API. FileThat, for example, supports quarterly submissions and the Final Declaration.

Third: sign up for MTD for Income Tax with HMRC on GOV.UK, before you connect the software to HMRC. Connecting does not sign you up, and software is refused until you are. How to sign up, and what to have ready.

Fourth: get your digital records in from 6 April 2026 and file the quarterly updates that are due. Because each update covers the tax year so far, the next one you file brings everything since 6 April up to date. Records must be submitted directly from your software, not typed into HMRC's website manually.

What Happens If You Miss a Deadline

HMRC applies a points-based penalty regime. Each missed tax return deadline earns one point, and from the 2027–28 tax year so does each missed quarterly update deadline. If you are required to join in April 2027, Budget 2026 announced no points for your 2027-28 quarterly updates, though it is not law yet. At 4 points you are charged a £200 penalty, and another £200 for each deadline you miss after that. A point below the threshold is removed automatically 24 months after the missed deadline. Once you reach the threshold, the points are only cleared after 12 months of filing on time, with nothing outstanding from the previous 24 months. To see how that plays out, try the MTD penalty calculator.

For the 2026–27 tax year, HMRC has said there are no penalties for missing a quarterly update deadline. That first-year concession covers quarterly updates only: a late Final Declaration and late payment are still penalised, and you still have to send your quarterly updates before you can make your Final Declaration. Getting set up now keeps the risk as small as it can be.

What Comes Next: April 2027 and April 2028

From 6 April 2027, MTD ITSA extends to sole traders and landlords with gross income between £30,000 and £50,000. This adds roughly 700,000 more taxpayers to the mandatory regime.

From 6 April 2028 the threshold falls again, to £20,000.

MTD has not been delayed. The Budget on 28 October 2026 kept both dates and announced two changes. If you are required to join in April 2027, your 2027-28 quarterly updates will not earn late submission points, though your tax return still does and you must send the updates before it. And some groups will not have to use MTD until further notice: people eligible for qualifying care relief, non-UK resident entertainers and sportspeople, and some people expected to be non-UK resident. Neither change is law yet, and HMRC's guidance pages had not caught up when we checked on 10 November 2026.

If your income puts you in the 2027 or 2028 wave, it is still worth setting up MTD-compatible software now. Getting comfortable with the system voluntarily, before it becomes mandatory, reduces stress and means your records are already in the right shape.