MTD for Income Tax: the complete guide for UK accountants (2026)

Making Tax Digital for Income Tax Self Assessment (MTD for ITSA) is no longer a future deadline to plan for — it has been live since 6 April 2026. The first cohort of sole traders and landlords submitted their first quarterly updates in August, and the threshold drops again next April. If your practice has not yet reworked how it collects records from affected clients, now is the time.

This guide covers who is in scope, the exact deadlines, how the new penalty system works, and what it all means for the way your firm works with clients.

Who is in scope?

MTD for Income Tax applies to sole traders and landlords whose qualifying income exceeds the threshold. Qualifying income is gross income — turnover before any expenses — from self-employment and UK property, added together. Salary, dividends, savings interest and pension income do not count towards the threshold.

The mandate is being phased in over three years:

Two things catch people out here. First, the test uses gross income, so a client turning over £52,000 with a modest profit is in scope. Second, self-employment and property income are combined — a client with £30,000 of freelance income and £25,000 of rental income crossed the £50,000 line in April.

General partnerships are not yet in scope, and there is no confirmed start date for them. Individuals who are digitally excluded can apply to HMRC for an exemption.

What clients in scope must do

• Keep digital records of income and expenses using HMRC-recognised software — spreadsheets alone no longer meet the requirement without bridging software.
• Send quarterly updates to HMRC summarising income and expenses for each quarter. Updates are cumulative, so errors found later can be corrected in the next update rather than by resubmitting.
• Submit a Final Declaration by 31 January after the tax year ends. This replaces the Self Assessment return for clients in scope and brings in everything the quarterly updates do not cover — employment income, dividends, reliefs and allowances.
• Pay any tax due by 31 January as before. MTD changes how clients report, not when they pay.

The quarterly deadline rhythm

Quarterly updates are due roughly one month after each quarter ends:

Clients can elect to use calendar quarters (ending 30 June, 30 September and so on) if that fits their records better — the filing deadlines stay the same.

The next deadline, 7 November 2026, is the second quarterly update for the April cohort. For many firms it will be the first one where the process has to run like clockwork rather than as a one-off scramble.

How the new penalty system works

MTD replaces the old automatic £100 late-filing fine with a points-based system. Each late submission earns a point; quarterly filers who reach four points receive a £200 penalty, with a further £200 for each late submission after that. Points expire after a period of sustained compliance. Separate late-payment penalties apply to unpaid tax.

There is one piece of breathing room: HMRC has confirmed a soft landing for the first year, so no penalty points are charged for late quarterly updates in 2026/27. From April 2027 the points system applies in full — and that is the same month the £30,000 cohort joins, so firms should treat this year as the rehearsal.

What this means for your practice

The biggest change is not the software — it is the rhythm. The annual January crunch becomes four smaller crunches a year, plus the Final Declaration. A few implications we see firms planning for:

• Four times the client touchpoints. Chasing receipts and bank statements once a year was painful; doing it quarterly without a system is unsustainable. Clients need a simple way to send you documents as they go, not a shoebox in January.
• Earlier conversations about scope. Clients between £20,000 and £50,000 of gross income will join in 2027 and 2028 — see our guide to getting the April 2027 £30,000 cohort ready. It is worth moving them onto digital records now, while it is still optional for them.
• Pricing. Quarterly reporting is more work than an annual return. Many firms are repricing sole trader and landlord work, or moving clients onto monthly packages.
• Deadline tracking. Four quarterly deadlines per client, on top of Companies House and Corporation Tax dates, is too much to run from memory or a spreadsheet.

This is exactly the workflow we built Kontua around: clients upload documents through their own portal instead of email, automated reminders chase outstanding items before each deadline, and every filing date sits on one calendar. If quarterly chasing is the part of MTD worrying you most, it is worth a look.

A practical checklist for the next quarter

1. List every sole trader and landlord client and work out which threshold year applies to them — £50,000 (already live), £30,000 (2027) or £20,000 (2028).
2. Confirm each in-scope client is signed up for MTD for Income Tax and using recognised software — MTD for VAT sign-up does not carry over.
3. Agree with each client how they will get records to you during the quarter, not after it.
4. Put 7 November, 7 February, 7 May and 7 August into your practice calendar as firm-wide deadlines.
5. Write to the 2027 cohort now. Clients who start keeping digital records this tax year will have a far easier April.

The bottom line

MTD for Income Tax rewards firms that systematise early. The tax itself has not changed, but the firms that come out of this well will be the ones whose clients send records quarterly as a habit — because the process makes it easy for them.