A potential client rang us last week, a little flustered. “I thought MTD was sorted. I got the software set up back in February. But nobody told me there was a deadline in August!” She’s not alone. Making Tax Digital for Income Tax launched on 6 April 2026, and while many sole traders and landlords have done the hard work of getting their software in place, the first quarterly submission deadline is now just a couple of months away.

 

If you’re a sole trader or landlord with qualifying income over £50,000, here’s everything you need to know about MTD for income tax 2026 and that 7 August deadline.

 

What is MTD for income tax and who does it apply to?

MTD for income tax – formally known as Making Tax Digital for Income Tax Self-Assessment (MTD ITSA) – replaces the annual Self-Assessment tax return with a new system of quarterly digital reporting. Instead of filing once a year, you now submit four quarterly updates to HMRC, plus a final declaration at the end of the tax year.

 

The rollout is happening in stages based on qualifying income, which means your combined gross income from self-employment and UK property – not your profit after expenses, but your total turnover:

 

• From April 2026: qualifying income over £50,000

• From April 2027: qualifying income over £30,000

• From April 2028: qualifying income over £20,000

 

If you were in scope from April 2026, you’re already in the system – whether you feel ready or not. The clock is running.

 

What is the 7 August 2026 deadline?

 

The first quarterly update under MTD for income tax 2026 covers the period from 6 April to 5 July 2026. It must be submitted through your MTD-compatible software by 7 August 2026.

 

It’s important to be clear about what a quarterly update actually is. It’s not a full tax return and it doesn’t trigger a tax payment. It’s a digital summary of your income and expenses for that three-month period, sent directly to HMRC through your software. Think of it as a regular progress report rather than a year-end reckoning.

 

The remaining quarterly deadlines for 2026/27 are:

 

• Q2 (6 July – 5 October 2026): due 7 November 2026

• Q3 (6 October – 5 January 2027): due 7 February 2027

• Q4 (6 January – 5 April 2027): due 7 May 2027

• Final declaration: due 31 January 2028

 

Your tax payment dates haven’t changed. Payments on account remain due on 31 January and 31 July, just as they were under Self-Assessment.

 

What if you miss the 7 August deadline?

 

There’s some good news here. HMRC has confirmed a ‘soft landing’ for 2026/27, meaning there are no penalty points for late quarterly updates during this first year. If you’re mandated into MTD for income tax 2026 and you miss the August deadline, you won’t receive a fine for that missed quarterly submission alone.

Don’t miss the final deadline though

However, this isn’t a free pass to ignore it. The soft landing applies only to quarterly updates – not to the final declaration and not to late payment penalties, which remain firmly in place. From 2027/28 onwards, the full points-based penalty system applies: each missed quarterly deadline earns a penalty point, and four points trigger a £200 fine, with further £200 penalties for each additional missed submission after that.

 

The sensible approach is to get into good habits now while the stakes are lower, rather than scrambling when penalties start to bite.

 

Haven’t signed up yet? Here’s what to do

 

HMRC doesn’t register you automatically. If your qualifying income exceeded £50,000 in 2024/25 and you haven’t signed up yet, you need to act quickly. Here’s what’s needed:

 

• Choose MTD-compatible software – options include Xero, QuickBooks, FreeAgent and Sage. Check HMRC’s approved list on GOV.UK.

• Sign up through your Government Gateway account – you’ll need to authorise HMRC to receive submissions from your software.

• Connect your bank feeds – this makes ongoing record-keeping much simpler.

• Enter your income and expenses for Q1 – covering 6 April to 5 July 2026.

• Submit by 7 August 2026. 

 

If you have multiple sources of qualifying income, for example, a self-employed business and rental income , each source needs to be signed up separately within your single MTD account.

 

If you’re not sure whether you need to join MTD for income tax 2026, or feeling confused about which software to use, we can help. Take a look at our MTD for Income Tax checklist and our guide to whether you need an accountant for MTD. Or simply give us a call – we’re happy to talk it through.

 

Getting help with MTD for income tax

 

MTD for income tax 2026 is a significant change to the way self-employed people and landlords report their earnings to HMRC. The quarterly reporting cycle does get easier once you’re into a routine, and many of our clients have found that staying on top of their records throughout the year gives them a much clearer picture of their finances than filing everything in one go in January.

 

At Adams Accountancy, we help sole traders and landlords across Kent navigate MTD with as little stress as possible. Whether you need help choosing software, setting up your records or handling your quarterly submissions, our friendly team is here for a free, no-obligation chat. Call us on 01322 250001 or get in touch online.

 

 

About the author

Michelle Adams is a qualified accountant and director at Adams Accountancy, a friendly all-female practice based in Dartford, Kent. With over 15 years’ experience supporting sole traders, landlords and limited companies across Kent and beyond, Michelle and her team specialise in making complex tax requirements simple and stress-free. Contact us on 01322 250001 for a free chat about Making Tax Digital or any aspect of your business finances.

 

Frequently asked questions about MTD for income tax 2026

Do I need to submit a Self-Assessment tax return for 2025/26 as well as MTD quarterly updates?

Yes. Your 2025/26 Self-Assessment return covers the tax year that ended on 5 April 2026 (before MTD came into force) and is still due by 31 January 2027 under the old system. MTD for income tax 2026 applies from the 2026/27 tax year onwards, so for this year you’re running both in parallel.

 

Will MTD quarterly updates change how much tax I pay?

No. MTD for income tax changes how and when you report your income to HMRC, not how much tax you owe. The same tax rates and allowances apply. Your actual tax liability is calculated through the final declaration after the tax year ends, and payment deadlines remain the same as under regular Self-Assessment.

 

What counts as qualifying income for MTD for income tax 2026?

Qualifying income is your combined gross income from self-employment and UK property letting – that’s your total turnover before expenses, not your profit. If your combined gross income from these sources exceeded £50,000 on your 2024/25 Self-Assessment return, you’re in scope for MTD from April 2026. Joint property owners only count their individual share of any rental income towards the threshold.

 

What happens to the penalty system once the soft-landing ends?

From 2027/28 onwards, HMRC will apply a points-based penalty system for late quarterly updates. Each missed submission adds one penalty point. Once you reach four points, a £200 fixed penalty is charged, with a further £200 for each additional missed deadline after that until you return to full compliance. Points expire after a sustained period of on-time submissions. The final declaration and late payment penalties are not covered by the soft landing and apply throughout – including in 2026/27.