Making Tax Digital for Income Tax went live on 6 April 2026. If your 2024-25 Self Assessment return shows more than £50,000 of gross income from self-employment and property combined, you’re in it now, and your first quarterly update is due by 7 August 2026. The test is turnover before expenses, not profit - which catches plenty of traders who assume they’re safely under the line.
The threshold is turnover, not profit
HMRC tests your “qualifying income”: everything you earned from self-employment and property in a tax year, defined in its guidance as your gross income - “income before you deduct expenses, also called your turnover”. Profit doesn’t enter into it.
Take a plumber who turned over £62,000 in 2024-25 with £21,000 of materials, fuel and tool costs - a profit of £41,000. (Those figures are illustrative; the rule isn’t.) On profit, she’d be nowhere near the threshold. On turnover, she’s mandated from April 2026.
The sources combine, too. HMRC’s own worked example: £25,000 of rent plus £27,000 of self-employment income makes £52,000 of qualifying income - over the line, though neither source alone gets close. For jointly owned property only your share counts: a 50/50 property producing £50,000 adds £25,000 to your total.
What doesn’t count: PAYE wages, dividends, pensions (state or private) and partnership profit shares. A side trade alongside a full-time job only trips the threshold if the trade and any property income clear it on their own.
And note the test year. Each phase tests the tax year two years before its start date, because HMRC checks the return you file for that year. April 2026 mandation rests on your 2024-25 return - the one due by 31 January 2026.
Your 2026-27 calendar if you’re in
The standard update periods follow the tax year, per HMRC’s quarterly updates guidance:
- Update 1 (6 April to 5 July 2026): due 7 August 2026
- Update 2 (cumulative to 5 October): due 7 November 2026
- Update 3 (to 5 January 2027): due 7 February 2027
- Update 4 (to 5 April 2027): due 7 May 2027
Updates are cumulative - each covers the whole year so far, so an error in one is simply corrected in the next. An update is summary totals of income and expenses per business; HMRC states it “will not receive details of individual digital records, such as a receipt or invoice”. It isn’t a mini tax return, and no tax is paid quarterly. If your books run to calendar months, you can elect calendar quarters (1 April to 30 June, and so on) in your software; the deadlines stay the same.
The old rhythm carries on underneath. Your 2025-26 return is still due 31 January 2027 under the current penalty rules, and the 2026-27 return and balancing payment fall due 31 January 2028. The payment dates haven’t moved, so if you’re potting money monthly for the bill, carry on exactly as before.
You need software
Quarterly updates can only be sent through compatible software - HMRC’s site hosts a finder tool listing what qualifies. Free products exist for those with simple tax affairs, though HMRC warns “there may be limits on how the product can be used”. If your records live in a spreadsheet, you don’t have to abandon it: bridging software connects to the spreadsheet and handles the digital submission. Whatever you pick must store and correct digital records, send the updates, and ultimately file the return itself.
Penalties: a soft first year, then points
HMRC has confirmed there are no penalties for missing a quarterly update deadline in 2026-27. The catch: all the updates must still be sent before you can submit your tax return, so ignoring them just stacks the work at the worst time of year.
From 2027-28, late updates and late returns earn penalty points - one per missed deadline - with a £200 fine at four points and £200 for each miss after that. Points expire after 24 months if you stay below the threshold, and they’re separate from any VAT penalty points. Once you hit four, you need 12 months of on-time filing and 24 months of outstanding submissions cleared before the slate wipes.
For 2026-27 tax paid late: nothing for the first 15 days, then 3% of the amount outstanding at day 15, another 3% of what’s still owed at day 30, then a 10% annual rate charged daily from day 31 (the 3% legs rise to 4% for 2027-28). As an illustration - the percentages are HMRC’s, the £5,000 is ours - leaving £5,000 of 2026-27 tax unpaid for 45 days after 31 January 2028 costs roughly £320 in penalties: £150 plus £150 plus about £20 of the daily charge, with late-payment interest on top from day one. Two softeners: in your first year under the new rules you get 30 days, not 15, to pay or agree a plan before penalties start (once only), and contacting HMRC to set up a payment plan pauses penalties from that day, provided you keep to it. Payments on account sit outside these late-payment penalties.
The £30,000 and £20,000 waves are already being measured
The £50,000 wave is only the start. Qualifying income over £30,000 in 2025-26 - the year that ended this April - means mandation from 6 April 2027. Over £20,000 in 2026-27 - the year you’re invoicing in right now - means 6 April 2028. Because of the two-year look-back, the books you’re keeping today decide whether you join the 2028 wave. Partnerships will follow at a date HMRC hasn’t yet set.
HMRC says it will write to you when your return shows you’re over a threshold, but the responsibility to check stays with you whether or not a letter lands. If you’re newly self-employed, you don’t have to start until after you’ve submitted your first Self Assessment return. Exemptions exist - digital exclusion is one - and an exempt trader files a normal return as before.
Do the sum this week
Pull your 2024-25 return and add gross turnover to gross rents, counting only your share of anything jointly owned. Over £50,000: choose software or bridging now and get update 1 in by 7 August 2026 - the penalty-free first year is for bedding in your process, not skipping it. Under £50,000: run the same sum for 2025-26 against £30,000, and watch this year’s takings against £20,000. The threshold is moving towards you, and it measures turnover, not profit.
