Making Tax Digital: what you need to know
The way Income Tax is reported to HMRC is set to change for millions of people across the United Kingdom through Making Tax Digital.
From April 2026, the Government will begin rolling out Making Tax Digital for Income Tax. This represents a major shift designed to modernise the Self Assessment process, helping individuals maintain clear and accurate financial records throughout the year. It marks the most significant change to personal tax reporting since Self Assessment was introduced over 30 years ago.
For homeowners, landlords, self-employed individuals, or those earning additional income, understanding these updates early will ensure a smoother transition. This guide explains what Making Tax Digital means, why it is happening, and how you can prepare with confidence.
Making Tax Digital, a new digital approach to Income Tax
Making Tax Digital is HMRC's long-term plan to move tax reporting fully online. Rather than collating all information annually for a traditional Self Assessment submission, individuals affected by the change will be required to keep digital records and submit quarterly updates using HMRC-recognised software.
The objective is to reduce errors, improve accuracy and transparency, and provide taxpayers with a clearer, more current view of their finances. This shift also helps to alleviate the pressure many people experience each January, establishing a more manageable routine throughout the year.
Under this new system, you will record income and expenses digitally, submit figures to HMRC every three months via compatible software, and complete a year-end Final Tax Return, replacing the existing annual Self Assessment process.
Who needs to join Making Tax Digital and when?
Making Tax Digital for Income Tax is being phased in gradually over several years. Whether you are required to join and when depends on your qualifying income, which is your gross income in the tax year. This refers to your total earnings from self-employment and property before expenses or allowances are applied.
The rollout is as follows:
April 2026: for individuals with qualifying income above £50,000
April 2027: for individuals with qualifying income above £30,000
April 2028: for individuals with qualifying income above £20,000
If you earn income from both property and self-employment, those figures are combined to determine whether you meet the qualifying income threshold. HMRC will contact eligible individuals; however, it will not sign you up automatically from the outset. You will need to register yourself before your start date.
If you have only recently begun letting property or working for yourself, you are not required to start using Making Tax Digital for Income Tax until after you have submitted your first Self Assessment tax return. However, you may choose to sign up early if you prefer.
How the new digital system will work
Once you are required to use Making Tax Digital, you will need to keep all relevant income and expense records in a digital format.
Quarterly summary updates will be submitted directly through your chosen HMRC-recognised software. These reports do not calculate tax; rather, they allow HMRC to gain a clearer understanding of your earnings during the year. Quarterly updates are due by the 7th day of the month following the end of each quarter.
From April 2026, the deadlines for these submissions are as follows:
7th August
7th November
7th February
7th May
At the end of the tax year, you will complete a Final Tax Return, which brings all income sources together, applies any allowances or adjustments, and calculates your final tax position. The deadline for this remains the 31st January, in line with the current Self Assessment process.
For landlords, the system is somewhat more detailed. You will need to keep digital records of rental income and submit separate quarterly updates for both rental and self-employment income if you have both.
What these changes mean for landlords
Making Tax Digital will apply to you if your rental income forms part of a total gross income that exceeds your relevant qualifying income threshold. This includes single-property landlords, multi-property landlords, and those earning property income alongside PAYE or self-employment income. Rental income must be recorded digitally and included in your quarterly submissions and Final Tax Return to HMRC.
If you are planning to expand your portfolio, streamline your accounting, or gain a clearer view of your rental finances, digital record-keeping can help you remain more organised. It also facilitates more straightforward conversations with accountants, financial planners, and mortgage advisers.
How to stay ahead of these changes
Even if Making Tax Digital does not apply to you until 2027 or 2028, preparing early will ensure a smoother transition. The following are practical steps you can take:
Check your income against the thresholds: Your most recent tax return will determine your start date. If your gross income exceeded £50,000, you will be included in the first phase from April 2026.
Explore HMRC-recognised software options: There are both free and paid tools available, including bridging software for spreadsheet users. Evaluating a few options early can help you identify a system that suits your needs.
Build digital habits: Keeping records up to date throughout the year will make quarterly submissions considerably easier and reduce the likelihood of errors.
Keep income sources clearly separated: If you are both a landlord and self-employed, you will need to report each income stream separately under Making Tax Digital. Establishing that organisation now will save time in the future.
Frequently asked questions about Making Tax Digital
Do I still need to submit a Self Assessment return?
During your transition year, yes. Thereafter, Making Tax Digital replaces the annual Self Assessment with quarterly updates and a Final Tax Return.
Can I still use spreadsheets?
Yes, provided you use bridging software that digitally links your spreadsheet to HMRC's system.
Is Making Tax Digital definitely happening in 2026?
Yes. The Government has reconfirmed the April 2026 start date, with no further delays announced.
What happens if I miss a quarterly deadline?
You may face penalties similar to those under the current Self Assessment system. It is therefore important to remain on top of your updates.
Does Making Tax Digital apply if I only rent out one property?
Yes, if your total qualifying income exceeds the threshold for your start date. Landlords are required to keep digital records and report property income quarterly to HMRC.
As Making Tax Digital begins its phased rollout, staying informed and organised will make the transition considerably smoother. Although quarterly digital reporting may represent a significant change, the objective is to establish a clearer, more modern, and more manageable approach to handling your tax affairs.
If you would like to find out more about Making Tax Digital or our tax service, please contact our dedicated team on 0345 305 2643 (Monday to Friday, 9am to 5.30pm).
Any information provided to you does not constitute tax advice and this article is not definitive tax guidance. Should you require assistance or have any uncertainty regarding the details in this article, we strongly recommend that you speak to your accountant or a professional tax adviser.
Correct at the time of publishing – 4th March 2026
