The Time Has Come to Make Tax Digital

First off — don't worry if you didn't file by 7 August, you're not in trouble.

But if you're a sole trader or landlord with gross income over £50,000, today's the day you've probably been hearing about for months. 7 August 2026: The first-ever Making Tax Digital quarterly deadline.

Some of you filed it and moved on. Some of you are reading this because you didn't quite get there. And a fair few are reading this because you're still not entirely sure what you were supposed to do — or what any of it actually means for your tax bill.

Let's find out together.

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1. Do I have to pay my tax bill quarterly now?

The single biggest misconception doing the rounds right now: that quarterly MTD updates mean quarterly tax bills.

They don't.

A quarterly update is an information return. You're telling HMRC your running income and expense totals — that's it. No payment is triggered. No tax is due.

HMRC uses the figures to show you a running estimate of your year-to-date position, which is useful for putting money aside. But the actual tax calculation happens once, at year-end, through your Final Declaration.

Your tax is still due on 31 January 2028 for the 2026/27 tax year — the same January deadline you've always had.

Four updates a year. One tax bill. Same as it ever was.

2. How to get set up if you're behind?

If your qualifying turnover (gross income before expenses from trade + property) was over £50,000 on your 2024/25 tax return, you need to be set up now:

1. Check your software: Ensure you're using the software listed on GOV.UK’s MTD for Income Tax directory (such as Xero or QuickBooks).
2. Connect to HMRC: Authorise the connection between your accounting software and your HMRC online account.
3. Keep digital records: Log all income and expenses digitally from 6 April 2026 onwards.

3. What do I actually submit in the quarterly MTD?

The Q1 MTD update covered the period 6 April to 5 July 2026. What went in was straightforward: category totals for your business income and expenses. Not individual receipts. Just the totals, organised into HMRC's expense categories — things like cost of goods, van costs, repairs, admin, advertising.

Your MTD-compatible accounting software generated that summary from your digital records and sent it through. If your records were in reasonable shape and if you’re using an app like Tradify to record your jobs, the whole thing took a few minutes.

Note: Each quarterly update covers the tax year to date, not just the three months just gone. That matters for Q2 onwards — if you had a rough Q1 figure, the right number in Q2 automatically supersedes it.

4. What if I missed the quarterly MTD filing?

HMRC has confirmed a soft landing for 2026/27: no penalty points will be issued for late quarterly updates this tax year. The entire first year of quarterly submissions is effectively penalty-free in terms of points. HMRC acknowledged that switching to quarterly digital reporting is a significant change and built in breathing room.

So if you didn't file by 7 August, you're not in trouble. Submit as soon as you can.

But the soft landing has clear limits. Three things it does not cover:

• Your Final Declaration. The year-end submission that replaces your old tax return is due 31 January 2028. Miss that, and penalty points apply under the normal rules.
• Late payment penalties. If you owe tax and pay it late, interest and penalties run from day one — the soft landing doesn't touch that.
• The obligation itself. The quarterly update is still legally required. The soft landing removes the penalty-point consequence this year; it doesn't make the submission optional.

The soft landing is a one-year concession. From 2027/28, the full points-based system kicks in: accumulate enough late submissions and you'll face an automatic £200 fine. The first year is your chance to get the rhythm right without the pressure.

5. Next MTD Dates 2026-2028

There are three more quarterly deadlines in 2026/27, plus the year-end submission:

• 7 November 2026 — Q2 (6 July to 5 October 2026)
• 7 February 2027 — Q3 (6 October 2026 to 5 January 2027)
• 7 May 2027 — Q4 (6 January 2027 to 5 April 2027)
• 31 January 2028 — Final Declaration (replaces your Self Assessment tax return for 2026/27)

Put them in your calendar now. Q2 is three months away — enough time to get properly set up if you're not already.

6. You still have to file the old tax return in 2026

This one catches people out. MTD is live for 2026/27 — but 2025/26 still runs under the old Self Assessment rules. That means you have a traditional Self Assessment return due by 31 January 2027.

For most people moving to MTD, this will be the last Self Assessment they ever file. But it still needs filing. Don't let the MTD noise push it out of your head.

So this January, you have two obligations: the 2025/26 Self Assessment (old system), and the Q3 MTD update for 2026/27 (new system, due 7 February).

7. What to do if you're not set up for MTD yet?

If you're in scope — gross income over £50,000 on your 2024/25 return — and you haven't got MTD software connected yet, here's the short version of what needs to happen:

1. Confirm you're in scope. The threshold is gross qualifying income, that's your self-employment turnover plus any property income, before expenses. Not profit. If you had £45,000 from your trade and £8,000 from a rental property, your qualifying income is £53,000 and MTD applies.
2. Choose software that's on HMRC's list. Both Xero and QuickBooks are HMRC-recognised for MTD for Income Tax. Check the GOV.UK software choices page and confirm the specific product tier you're looking at is listed for MTD for Income Tax — not just MTD for VAT, which is a separate recognition. If you already use Tradify, it integrates with both Xero and QuickBooks, so your jobs, invoices and expenses are already flowing into the right place.
3. Connect your software to HMRC. You'll need to authorise the connection through your HMRC online account. Your accounting software's settings will walk you through it.
4. Get your records into digital format. Income and expenses need to be in your software, tagged to HMRC's categories, from 6 April 2026 onwards. If you've been keeping records on paper or in a spreadsheet, now's the time to get them across.
5. Submit Q1 as soon as you can. The soft landing means there's no penalty-point consequence for being late this year — but the obligation stands, and you need all four quarterly updates submitted before you can file your Final Declaration in January 2028.

If you're not sure whether you're in scope, or you're unsure about your software setup, talk to your accountant. This is general information — your specific position depends on your own figures and circumstances.

8. The MTD big picture

MTD Phase 1 covers sole traders and landlords with qualifying income over £50,000. But the scheme expands. From April 2027, the threshold drops to £30,000. From April 2028, it drops again to £20,000.

At £20,000, most sole traders in the trades will be in scope — electricians on domestic jobs, plumbers working as subcontractors, gas engineers running their own books. If you're not in scope yet, your runway is shorter than it looks.

The tradespeople who'll find this easiest are the ones who've already got their jobs, invoices and expenses in one place. Not because of MTD specifically — just because that's what running a tidy business looks like. The quarterly update is a few minutes of admin when your records are in order. It's a scramble when they're not.

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